Correlation Between Victory Rs and Sterling Capital

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

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

Diversification Opportunities for Victory Rs and Sterling Capital

0.95

Correlation Coefficient

Victory Rs  Sterling Capital

Almost no diversification

The 3 months correlation between Victory and Sterling is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Victory Rs Value and Sterling Capital Stratton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Stratton and Victory Rs 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 Victory Rs Value 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 Stratton has no effect on the direction of Victory Rs i.e., Victory Rs and Sterling Capital go up and down completely randomly.

Pair Corralation between Victory Rs and Sterling Capital

Assuming the 90 days horizon Victory Rs is expected to generate 1.86 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, Victory Rs Value is 1.54 times less risky than Sterling Capital. It trades about 0.14 of its potential returns per unit of risk. Sterling Capital Stratton is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4,648  in Sterling Capital Stratton on September 4, 2024 and sell it today you would earn a total of  599.00  from holding Sterling Capital Stratton or generate 12.89% return on investment over 90 days.

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

Victory Rs Value  vs.  Sterling Capital Stratton

Victory Rs Value

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Rs Value are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Victory Rs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sterling Capital Stratton

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Stratton are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Sterling Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Victory Rs and Sterling Capital

The main advantage of trading using opposite Victory Rs and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Rs 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 Victory Rs Value and Sterling Capital Stratton 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.