Correlation Between Sterling Capital and VictoryShares Multi

Can any of the company-specific risk be diversified away by investing in both Sterling Capital and VictoryShares Multi 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 VictoryShares Multi 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 VictoryShares Multi Factor Minimum, you can compare the effects of market volatilities on Sterling Capital and VictoryShares Multi 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 VictoryShares Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and VictoryShares Multi.

Diversification Opportunities for Sterling Capital and VictoryShares Multi

0.84

Correlation Coefficient

Sterling Capital  VictoryShares Multi

Very poor diversification

The 3 months correlation between Sterling and VictoryShares is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Focus and VictoryShares Multi Factor Min in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares Multi 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 VictoryShares Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares Multi has no effect on the direction of Sterling Capital i.e., Sterling Capital and VictoryShares Multi go up and down completely randomly.

Pair Corralation between Sterling Capital and VictoryShares Multi

Considering the 90-day investment horizon Sterling Capital Focus is expected to generate 2.46 times more return on investment than VictoryShares Multi. However, Sterling Capital is 2.46 times more volatile than VictoryShares Multi Factor Minimum. It trades about 0.02 of its potential returns per unit of risk. VictoryShares Multi Factor Minimum is currently generating about -0.28 per unit of risk. If you would invest  3,021  in Sterling Capital Focus on September 22, 2024 and sell it today you would earn a total of  9.00  from holding Sterling Capital Focus or generate 0.3% return on investment over 90 days.

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

Sterling Capital Focus  vs.  VictoryShares Multi Factor Min

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.

VictoryShares Multi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VictoryShares Multi Factor Minimum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, VictoryShares Multi is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sterling Capital and VictoryShares Multi

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

The idea behind Sterling Capital Focus and VictoryShares Multi Factor Minimum 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.