Correlation Between Sterling Capital and Deutsche Real

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

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

Diversification Opportunities for Sterling Capital and Deutsche Real

0.74

Correlation Coefficient

Sterling Capital  Deutsche Real

Poor diversification

The 3 months correlation between Sterling and Deutsche is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Mid and Deutsche Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Real Estate 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 Mid are associated (or correlated) with Deutsche Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Real Estate has no effect on the direction of Sterling Capital i.e., Sterling Capital and Deutsche Real go up and down completely randomly.

Pair Corralation between Sterling Capital and Deutsche Real

Assuming the 90 days horizon Sterling Capital Mid is expected to under-perform the Deutsche Real. In addition to that, Sterling Capital is 1.54 times more volatile than Deutsche Real Estate. It trades about -0.33 of its total potential returns per unit of risk. Deutsche Real Estate is currently generating about -0.33 per unit of volatility. If you would invest  2,390  in Deutsche Real Estate on September 29, 2024 and sell it today you would lose (210.00) from holding Deutsche Real Estate or give up 8.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Sterling Capital Mid  vs.  Deutsche Real Estate

Sterling Capital Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sterling Capital Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Deutsche Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating 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.

Pair Trading with Sterling Capital and Deutsche Real

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

The idea behind Sterling Capital Mid and Deutsche Real Estate 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.