Correlation Between Sterling Capital and Old Westbury

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

Diversification Opportunities for Sterling Capital and Old Westbury

0.97

Correlation Coefficient

Sterling Capital  Old Westbury

Almost no diversification

The 3 months correlation between Sterling and Old is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Old Westbury Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Short has no effect on the direction of Sterling Capital i.e., Sterling Capital and Old Westbury go up and down completely randomly.

Pair Corralation between Sterling Capital and Old Westbury

Assuming the 90 days horizon Sterling Capital Short is expected to generate 1.25 times more return on investment than Old Westbury. However, Sterling Capital is 1.25 times more volatile than Old Westbury Short Term. It trades about 0.2 of its potential returns per unit of risk. Old Westbury Short Term is currently generating about 0.24 per unit of risk. If you would invest  826.00  in Sterling Capital Short on December 29, 2024 and sell it today you would earn a total of  12.00  from holding Sterling Capital Short or generate 1.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Sterling Capital Short  vs.  Old Westbury Short Term

Sterling Capital Short

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Short are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Sterling Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Old Westbury Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Old Westbury Short Term are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Old Westbury is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sterling Capital and Old Westbury

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

The idea behind Sterling Capital Short and Old Westbury Short Term 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..