Correlation Between Multimedia Portfolio and Sterling Capital

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

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

Diversification Opportunities for Multimedia Portfolio and Sterling Capital

0.32

Correlation Coefficient

Multimedia Portfolio  Sterling Capital

Weak diversification

The 3 months correlation between Multimedia and Sterling is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Multimedia Portfolio Multimedi and Sterling Capital Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Special and Multimedia Portfolio 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 Multimedia Portfolio Multimedia 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 Special has no effect on the direction of Multimedia Portfolio i.e., Multimedia Portfolio and Sterling Capital go up and down completely randomly.

Pair Corralation between Multimedia Portfolio and Sterling Capital

Assuming the 90 days horizon Multimedia Portfolio Multimedia is expected to generate 0.56 times more return on investment than Sterling Capital. However, Multimedia Portfolio Multimedia is 1.78 times less risky than Sterling Capital. It trades about 0.2 of its potential returns per unit of risk. Sterling Capital Special is currently generating about -0.04 per unit of risk. If you would invest  10,205  in Multimedia Portfolio Multimedia on September 18, 2024 and sell it today you would earn a total of  1,379  from holding Multimedia Portfolio Multimedia or generate 13.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Multimedia Portfolio Multimedi  vs.  Sterling Capital Special

Multimedia Portfolio

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multimedia Portfolio Multimedia are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Multimedia Portfolio showed solid returns over the last few months and may actually be approaching a breakup point.

Sterling Capital Special

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sterling Capital Special has generated negative risk-adjusted returns adding no value to fund investors. 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 Multimedia Portfolio and Sterling Capital

The main advantage of trading using opposite Multimedia Portfolio and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multimedia Portfolio 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 Multimedia Portfolio Multimedia and Sterling Capital Special 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.