Correlation Between Aam/himco Short and Sterling Capital

Can any of the company-specific risk be diversified away by investing in both Aam/himco Short and Sterling Capital 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 Aam/himco Short and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aamhimco Short Duration and Sterling Capital Behavioral, you can compare the effects of market volatilities on Aam/himco Short and Sterling Capital 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 Aam/himco Short with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aam/himco Short and Sterling Capital.

Diversification Opportunities for Aam/himco Short and Sterling Capital

0.25

Correlation Coefficient

Aam/himco Short  Sterling Capital

Modest diversification

The 3 months correlation between Aam/himco and Sterling is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Aamhimco Short Duration and Sterling Capital Behavioral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Beh and Aam/himco Short 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 Aamhimco Short Duration are associated (or correlated) with Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Beh has no effect on the direction of Aam/himco Short i.e., Aam/himco Short and Sterling Capital go up and down completely randomly.

Pair Corralation between Aam/himco Short and Sterling Capital

Assuming the 90 days horizon Aam/himco Short is expected to generate 1.44 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, Aamhimco Short Duration is 14.63 times less risky than Sterling Capital. It trades about 0.24 of its potential returns per unit of risk. Sterling Capital Behavioral is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,641  in Sterling Capital Behavioral on October 10, 2024 and sell it today you would earn a total of  178.00  from holding Sterling Capital Behavioral or generate 10.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Aamhimco Short Duration  vs.  Sterling Capital Behavioral

Aamhimco Short Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aamhimco Short Duration has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Aam/himco Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sterling Capital Beh

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sterling Capital Behavioral has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Aam/himco Short and Sterling Capital

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

The idea behind Aamhimco Short Duration and Sterling Capital Behavioral 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..