Correlation Between RBC Bearings and Hillman Solutions

Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Hillman Solutions 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 Hillman Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RBC Bearings and Hillman Solutions Corp, you can compare the effects of market volatilities on RBC Bearings and Hillman Solutions 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 Hillman Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Hillman Solutions.

Diversification Opportunities for RBC Bearings and Hillman Solutions

-0.12

Correlation Coefficient

RBC Bearings  Hillman Solutions

Good diversification

The 3 months correlation between RBC and Hillman is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings and Hillman Solutions Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillman Solutions Corp 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 are associated (or correlated) with Hillman Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillman Solutions Corp has no effect on the direction of RBC Bearings i.e., RBC Bearings and Hillman Solutions go up and down completely randomly.

Pair Corralation between RBC Bearings and Hillman Solutions

Given the investment horizon of 90 days RBC Bearings is expected to under-perform the Hillman Solutions. But the stock apears to be less risky and, when comparing its historical volatility, RBC Bearings is 1.24 times less risky than Hillman Solutions. The stock trades about -0.12 of its potential returns per unit of risk. The Hillman Solutions Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  975.00  in Hillman Solutions Corp on August 31, 2024 and sell it today you would earn a total of  165.00  from holding Hillman Solutions Corp or generate 16.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

RBC Bearings  vs.  Hillman Solutions Corp

RBC Bearings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RBC Bearings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Hillman Solutions Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hillman Solutions Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Hillman Solutions displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RBC Bearings and Hillman Solutions

The main advantage of trading using opposite RBC Bearings and Hillman Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Hillman Solutions 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 Hillman Solutions will offset losses from the drop in Hillman Solutions' long position.

The idea behind RBC Bearings and Hillman Solutions Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.