Correlation Between Performance Trust and Sterling Capital

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

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

Diversification Opportunities for Performance Trust and Sterling Capital

0.24

Correlation Coefficient

Performance Trust  Sterling Capital

Modest diversification

The 3 months correlation between Performance and Sterling is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Performance Trust Strategic and Sterling Capital Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Short and Performance Trust 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 Performance Trust Strategic 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 Short has no effect on the direction of Performance Trust i.e., Performance Trust and Sterling Capital go up and down completely randomly.

Pair Corralation between Performance Trust and Sterling Capital

Assuming the 90 days horizon Performance Trust is expected to generate 2.55 times less return on investment than Sterling Capital. In addition to that, Performance Trust is 2.57 times more volatile than Sterling Capital Short. It trades about 0.02 of its total potential returns per unit of risk. Sterling Capital Short is currently generating about 0.14 per unit of volatility. If you would invest  829.00  in Sterling Capital Short on November 28, 2024 and sell it today you would earn a total of  8.00  from holding Sterling Capital Short or generate 0.97% return on investment over 90 days.

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

Performance Trust Strategic  vs.  Sterling Capital Short

Performance Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Trust Strategic are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Performance Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sterling Capital Short

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Short are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. 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 Performance Trust and Sterling Capital

The main advantage of trading using opposite Performance Trust and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Trust 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 Performance Trust Strategic and Sterling Capital Short 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.