Correlation Between Black Oak and Sterling Capital

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

By analyzing existing cross correlation between Black Oak Emerging and Sterling Capital Equity, you can compare the effects of market volatilities on Black Oak 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 Black Oak with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Oak and Sterling Capital.

Diversification Opportunities for Black Oak and Sterling Capital

0.38

Correlation Coefficient

Black Oak  Sterling Capital

Weak diversification

The 3 months correlation between Black and Sterling is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Black Oak Emerging and Sterling Capital Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Equity and Black Oak 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 Black Oak Emerging 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 Equity has no effect on the direction of Black Oak i.e., Black Oak and Sterling Capital go up and down completely randomly.

Pair Corralation between Black Oak and Sterling Capital

Assuming the 90 days horizon Black Oak Emerging is expected to under-perform the Sterling Capital. In addition to that, Black Oak is 2.3 times more volatile than Sterling Capital Equity. It trades about -0.12 of its total potential returns per unit of risk. Sterling Capital Equity is currently generating about 0.01 per unit of volatility. If you would invest  2,191  in Sterling Capital Equity on December 21, 2024 and sell it today you would earn a total of  9.00  from holding Sterling Capital Equity or generate 0.41% return on investment over 90 days.

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

Black Oak Emerging  vs.  Sterling Capital Equity

Black Oak Emerging

Risk-Adjusted Performance

Very Weak

Over the last 90 days Black Oak Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Sterling Capital Equity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Equity are ranked lower than 1 (%) 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.

Pair Trading with Black Oak and Sterling Capital

The main advantage of trading using opposite Black Oak and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Oak 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 Black Oak Emerging and Sterling Capital Equity 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.