Correlation Between Oil Gas and Sterling Capital

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

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

Diversification Opportunities for Oil Gas and Sterling Capital

0.42

Correlation Coefficient

Oil Gas  Sterling Capital

Very weak diversification

The 3 months correlation between Oil and Sterling is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Oil Gas Ultrasector 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 Oil Gas 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 Oil Gas Ultrasector 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 Oil Gas i.e., Oil Gas and Sterling Capital go up and down completely randomly.

Pair Corralation between Oil Gas and Sterling Capital

Assuming the 90 days horizon Oil Gas Ultrasector is expected to under-perform the Sterling Capital. In addition to that, Oil Gas is 1.47 times more volatile than Sterling Capital Behavioral. It trades about -0.24 of its total potential returns per unit of risk. Sterling Capital Behavioral is currently generating about -0.26 per unit of volatility. If you would invest  1,027  in Sterling Capital Behavioral on October 10, 2024 and sell it today you would lose (60.00) from holding Sterling Capital Behavioral or give up 5.84% of portfolio value over 90 days.

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

Oil Gas Ultrasector  vs.  Sterling Capital Behavioral

Oil Gas Ultrasector

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite Oil Gas and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Gas 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 Oil Gas Ultrasector 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.