Correlation Between Great West and Sterling Capital

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

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

Diversification Opportunities for Great West and Sterling Capital

0.86

Correlation Coefficient

Great West  Sterling Capital

Very poor diversification

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

Pair Corralation between Great West and Sterling Capital

Assuming the 90 days horizon Great West Loomis Sayles is expected to generate 0.97 times more return on investment than Sterling Capital. However, Great West Loomis Sayles is 1.03 times less risky than Sterling Capital. It trades about 0.05 of its potential returns per unit of risk. Sterling Capital Behavioral is currently generating about 0.04 per unit of risk. If you would invest  3,160  in Great West Loomis Sayles on September 17, 2024 and sell it today you would earn a total of  896.00  from holding Great West Loomis Sayles or generate 28.35% return on investment over 90 days.

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

Great West Loomis Sayles  vs.  Sterling Capital Behavioral

Great West Loomis

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Loomis Sayles are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Great West is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sterling Capital Beh

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sterling Capital Behavioral has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental 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 Great West and Sterling Capital

The main advantage of trading using opposite Great West and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West 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 Great West Loomis Sayles and Sterling Capital Behavioral 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.