Correlation Between Loomis Sayles and Sterling Capital

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

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

Diversification Opportunities for Loomis Sayles and Sterling Capital

0.63

Correlation Coefficient

Loomis Sayles  Sterling Capital

Poor diversification

The 3 months correlation between Loomis and Sterling is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Loomis Sayles Growth 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 Loomis Sayles 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 Loomis Sayles Growth 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 Loomis Sayles i.e., Loomis Sayles and Sterling Capital go up and down completely randomly.

Pair Corralation between Loomis Sayles and Sterling Capital

Assuming the 90 days horizon Loomis Sayles Growth is expected to under-perform the Sterling Capital. In addition to that, Loomis Sayles is 1.97 times more volatile than Sterling Capital Equity. It trades about -0.09 of its total potential returns per unit of risk. Sterling Capital Equity is currently generating about 0.03 per unit of volatility. If you would invest  2,196  in Sterling Capital Equity on December 27, 2024 and sell it today you would earn a total of  24.00  from holding Sterling Capital Equity or generate 1.09% return on investment over 90 days.

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

Loomis Sayles Growth  vs.  Sterling Capital Equity

Loomis Sayles Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loomis Sayles Growth 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 Equity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Equity are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward 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 Loomis Sayles and Sterling Capital

The main advantage of trading using opposite Loomis Sayles and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loomis Sayles 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 Loomis Sayles Growth 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.