Correlation Between RBC Bearings and Wallbox NV

Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Wallbox NV at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining RBC Bearings and Wallbox NV into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RBC Bearings Incorporated and Wallbox NV WT, you can compare the effects of market volatilities on RBC Bearings and Wallbox NV and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in RBC Bearings with a short position of Wallbox NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Wallbox NV.

Diversification Opportunities for RBC Bearings and Wallbox NV

-0.43

Correlation Coefficient

RBC Bearings  Wallbox NV

Very good diversification

The 3 months correlation between RBC and Wallbox is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Wallbox NV WT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wallbox NV WT and RBC Bearings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on RBC Bearings Incorporated are associated (or correlated) with Wallbox NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wallbox NV WT has no effect on the direction of RBC Bearings i.e., RBC Bearings and Wallbox NV go up and down completely randomly.

Pair Corralation between RBC Bearings and Wallbox NV

Considering the 90-day investment horizon RBC Bearings Incorporated is expected to under-perform the Wallbox NV. But the stock apears to be less risky and, when comparing its historical volatility, RBC Bearings Incorporated is 47.74 times less risky than Wallbox NV. The stock trades about -0.56 of its potential returns per unit of risk. The Wallbox NV WT is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Wallbox NV WT on October 8, 2024 and sell it today you would lose (2.00) from holding Wallbox NV WT or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

RBC Bearings Incorporated  vs.  Wallbox NV WT

RBC Bearings

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, RBC Bearings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Wallbox NV WT

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wallbox NV WT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Wallbox NV unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RBC Bearings and Wallbox NV

The main advantage of trading using opposite RBC Bearings and Wallbox NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Wallbox NV can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Wallbox NV will offset losses from the drop in Wallbox NV's long position.

The idea behind RBC Bearings Incorporated and Wallbox NV WT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.