Correlation Between Wallbox NV and RBC Bearings

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

By analyzing existing cross correlation between Wallbox NV WT and RBC Bearings Incorporated, you can compare the effects of market volatilities on Wallbox NV and RBC Bearings 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 Wallbox NV with a short position of RBC Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wallbox NV and RBC Bearings.

Diversification Opportunities for Wallbox NV and RBC Bearings

-0.43

Correlation Coefficient

Wallbox NV  RBC Bearings

Very good diversification

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

Pair Corralation between Wallbox NV and RBC Bearings

Assuming the 90 days trading horizon Wallbox NV WT is expected to generate 47.74 times more return on investment than RBC Bearings. However, Wallbox NV is 47.74 times more volatile than RBC Bearings Incorporated. It trades about 0.1 of its potential returns per unit of risk. RBC Bearings Incorporated is currently generating about -0.56 per unit of risk. 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

Wallbox NV WT  vs.  RBC Bearings Incorporated

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.

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.

Pair Trading with Wallbox NV and RBC Bearings

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

The idea behind Wallbox NV WT and RBC Bearings Incorporated 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..