Correlation Between Sterling Capital and Astor Long/short

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

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

Diversification Opportunities for Sterling Capital and Astor Long/short

-0.47

Correlation Coefficient

Sterling Capital  Astor Long/short

Very good diversification

The 3 months correlation between Sterling and Astor is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Astor Longshort Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astor Long/short and Sterling Capital 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 Sterling Capital Short are associated (or correlated) with Astor Long/short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astor Long/short has no effect on the direction of Sterling Capital i.e., Sterling Capital and Astor Long/short go up and down completely randomly.

Pair Corralation between Sterling Capital and Astor Long/short

Assuming the 90 days horizon Sterling Capital is expected to generate 1.52 times less return on investment than Astor Long/short. But when comparing it to its historical volatility, Sterling Capital Short is 3.18 times less risky than Astor Long/short. It trades about 0.14 of its potential returns per unit of risk. Astor Longshort Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,113  in Astor Longshort Fund on December 2, 2024 and sell it today you would earn a total of  178.00  from holding Astor Longshort Fund or generate 15.99% return on investment over 90 days.

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

Sterling Capital Short  vs.  Astor Longshort Fund

Sterling Capital Short

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Short are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Sterling Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Astor Long/short

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astor Longshort Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Sterling Capital and Astor Long/short

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

The idea behind Sterling Capital Short and Astor Longshort Fund 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.