Correlation Between Dfa Social and Sterling Capital

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

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

Diversification Opportunities for Dfa Social and Sterling Capital

0.93

Correlation Coefficient

Dfa Social  Sterling Capital

Almost no diversification

The 3 months correlation between Dfa and Sterling is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Social Fixed and Sterling Capital Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Short and Dfa Social 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 Dfa Social Fixed 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 Short has no effect on the direction of Dfa Social i.e., Dfa Social and Sterling Capital go up and down completely randomly.

Pair Corralation between Dfa Social and Sterling Capital

Assuming the 90 days horizon Dfa Social Fixed is expected to generate 2.57 times more return on investment than Sterling Capital. However, Dfa Social is 2.57 times more volatile than Sterling Capital Short. It trades about 0.11 of its potential returns per unit of risk. Sterling Capital Short is currently generating about 0.2 per unit of risk. If you would invest  897.00  in Dfa Social Fixed on December 29, 2024 and sell it today you would earn a total of  18.00  from holding Dfa Social Fixed or generate 2.01% return on investment over 90 days.

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

Dfa Social Fixed  vs.  Sterling Capital Short

Dfa Social Fixed

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Social Fixed are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Dfa Social is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Dfa Social and Sterling Capital

The main advantage of trading using opposite Dfa Social and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Social 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 Dfa Social Fixed and Sterling Capital Short 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .