Correlation Between Manning Napier and Sterling Capital

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

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

Diversification Opportunities for Manning Napier and Sterling Capital

0.86

Correlation Coefficient

Manning Napier  Sterling Capital

Very poor diversification

The 3 months correlation between Manning and Sterling is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Manning Napier Diversified and Sterling Capital Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Total and Manning Napier 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 Manning Napier Diversified 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 Total has no effect on the direction of Manning Napier i.e., Manning Napier and Sterling Capital go up and down completely randomly.

Pair Corralation between Manning Napier and Sterling Capital

Assuming the 90 days horizon Manning Napier Diversified is expected to generate 0.83 times more return on investment than Sterling Capital. However, Manning Napier Diversified is 1.21 times less risky than Sterling Capital. It trades about -0.33 of its potential returns per unit of risk. Sterling Capital Total is currently generating about -0.51 per unit of risk. If you would invest  1,049  in Manning Napier Diversified on October 10, 2024 and sell it today you would lose (15.00) from holding Manning Napier Diversified or give up 1.43% of portfolio value over 90 days.

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

Manning Napier Diversified  vs.  Sterling Capital Total

Manning Napier Diver

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sterling Capital Total

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sterling Capital Total 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 Manning Napier and Sterling Capital

The main advantage of trading using opposite Manning Napier and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manning Napier 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 Manning Napier Diversified and Sterling Capital Total 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.