Correlation Between Sterling Capital and Europac Gold

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

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

Diversification Opportunities for Sterling Capital and Europac Gold

0.71

Correlation Coefficient

Sterling Capital  Europac Gold

Poor diversification

The 3 months correlation between Sterling and Europac is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Behavioral and Europac Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europac Gold 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 Behavioral are associated (or correlated) with Europac Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europac Gold has no effect on the direction of Sterling Capital i.e., Sterling Capital and Europac Gold go up and down completely randomly.

Pair Corralation between Sterling Capital and Europac Gold

Assuming the 90 days horizon Sterling Capital Behavioral is expected to generate 0.49 times more return on investment than Europac Gold. However, Sterling Capital Behavioral is 2.03 times less risky than Europac Gold. It trades about -0.27 of its potential returns per unit of risk. Europac Gold Fund is currently generating about -0.15 per unit of risk. If you would invest  1,025  in Sterling Capital Behavioral on October 9, 2024 and sell it today you would lose (51.00) from holding Sterling Capital Behavioral or give up 4.98% of portfolio value over 90 days.

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

Sterling Capital Behavioral  vs.  Europac Gold Fund

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 latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Europac Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europac Gold Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental 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 Europac Gold

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

The idea behind Sterling Capital Behavioral and Europac Gold Fund 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..