Correlation Between Altegris Futures and Sterling Capital

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

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

Diversification Opportunities for Altegris Futures and Sterling Capital

-0.01

Correlation Coefficient

Altegris Futures  Sterling Capital

Good diversification

The 3 months correlation between Altegris and Sterling is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Altegris Futures Evolution 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 Altegris Futures 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 Altegris Futures Evolution 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 Altegris Futures i.e., Altegris Futures and Sterling Capital go up and down completely randomly.

Pair Corralation between Altegris Futures and Sterling Capital

Assuming the 90 days horizon Altegris Futures Evolution is expected to generate 0.24 times more return on investment than Sterling Capital. However, Altegris Futures Evolution is 4.25 times less risky than Sterling Capital. It trades about -0.13 of its potential returns per unit of risk. Sterling Capital Equity is currently generating about -0.12 per unit of risk. If you would invest  720.00  in Altegris Futures Evolution on September 17, 2024 and sell it today you would lose (36.00) from holding Altegris Futures Evolution or give up 5.0% of portfolio value over 90 days.

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

Altegris Futures Evolution  vs.  Sterling Capital Equity

Altegris Futures Evo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altegris Futures Evolution has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Altegris Futures is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sterling Capital Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sterling Capital Equity 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Altegris Futures and Sterling Capital

The main advantage of trading using opposite Altegris Futures and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altegris Futures 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 Altegris Futures Evolution 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.