Correlation Between RBC Bearings and Timken

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

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

Diversification Opportunities for RBC Bearings and Timken

0.0

Correlation Coefficient

RBC Bearings  Timken

Pay attention - limited upside

The 3 months correlation between RBC and Timken is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings and Timken Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timken Company 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 Timken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timken Company has no effect on the direction of RBC Bearings i.e., RBC Bearings and Timken go up and down completely randomly.

Pair Corralation between RBC Bearings and Timken

If you would invest  7,712  in Timken Company on November 29, 2024 and sell it today you would earn a total of  304.00  from holding Timken Company or generate 3.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

RBC Bearings  vs.  Timken Company

RBC Bearings

Risk-Adjusted Performance

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 relatively invariable fundamental indicators, RBC Bearings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Timken Company

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Timken Company are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward-looking signals, Timken is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with RBC Bearings and Timken

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

The idea behind RBC Bearings and Timken Company 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.