Correlation Between RBC Bearings and Cytokinetics

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Can any of the company-specific risk be diversified away by investing in both RBC Bearings and Cytokinetics 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 Cytokinetics 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 Cytokinetics, you can compare the effects of market volatilities on RBC Bearings and Cytokinetics 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 Cytokinetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Bearings and Cytokinetics.

Diversification Opportunities for RBC Bearings and Cytokinetics

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between RBC Bearings and Cytokinetics is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated and Cytokinetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytokinetics 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 Cytokinetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cytokinetics has no effect on the direction of RBC Bearings i.e., RBC Bearings and Cytokinetics go up and down completely randomly.

Pair Corralation between RBC Bearings and Cytokinetics

Given the investment horizon of 90 days RBC Bearings Incorporated is expected to under-perform the Cytokinetics. But the stock apears to be less risky and, when comparing its historical volatility, RBC Bearings Incorporated is 1.35 times less risky than Cytokinetics. The stock trades about -0.02 of its potential returns per unit of risk. The Cytokinetics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,975  in Cytokinetics on September 4, 2022 and sell it today you would earn a total of  74.00  from holding Cytokinetics or generate 1.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy77.27%
ValuesDaily Returns

RBC Bearings Incorporated  vs.  Cytokinetics

 Performance (%) 
       Timeline  
RBC Bearings Incorporated 
RBC Bearings Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady essential indicators, RBC Bearings is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

RBC Bearings Price Channel

Cytokinetics 
Cytokinetics Performance
0 of 100
Over the last 90 days Cytokinetics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2023. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Cytokinetics Price Channel

RBC Bearings and Cytokinetics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with RBC Bearings and Cytokinetics

The main advantage of trading using opposite RBC Bearings and Cytokinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings position performs unexpectedly, Cytokinetics 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 Cytokinetics will offset losses from the drop in Cytokinetics' long position.
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The idea behind RBC Bearings Incorporated and Cytokinetics 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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Check out your portfolio center. 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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