Correlation Between Sterling Capital and Schwab Fundamental

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

By analyzing existing cross correlation between Sterling Capital Focus and Schwab Fundamental Large, you can compare the effects of market volatilities on Sterling Capital and Schwab Fundamental 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 Schwab Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Schwab Fundamental.

Diversification Opportunities for Sterling Capital and Schwab Fundamental

0.78

Correlation Coefficient

Sterling Capital  Schwab Fundamental

Poor diversification

The 3 months correlation between Sterling and Schwab is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Focus and Schwab Fundamental Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Fundamental Large 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 Focus are associated (or correlated) with Schwab Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Fundamental Large has no effect on the direction of Sterling Capital i.e., Sterling Capital and Schwab Fundamental go up and down completely randomly.

Pair Corralation between Sterling Capital and Schwab Fundamental

Considering the 90-day investment horizon Sterling Capital is expected to generate 1.42 times less return on investment than Schwab Fundamental. In addition to that, Sterling Capital is 1.82 times more volatile than Schwab Fundamental Large. It trades about 0.04 of its total potential returns per unit of risk. Schwab Fundamental Large is currently generating about 0.11 per unit of volatility. If you would invest  1,803  in Schwab Fundamental Large on September 30, 2024 and sell it today you would earn a total of  586.00  from holding Schwab Fundamental Large or generate 32.5% return on investment over 90 days.

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

Sterling Capital Focus  vs.  Schwab Fundamental Large

Sterling Capital Focus

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Focus are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Sterling Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Schwab Fundamental Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwab Fundamental Large has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Schwab Fundamental is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sterling Capital and Schwab Fundamental

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

The idea behind Sterling Capital Focus and Schwab Fundamental Large 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.