Correlation Between Sterling Capital and Stralem Equity

Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Stralem Equity 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 Stralem Equity 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 Stralem Equity Fund, you can compare the effects of market volatilities on Sterling Capital and Stralem Equity 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 Stralem Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Stralem Equity.

Diversification Opportunities for Sterling Capital and Stralem Equity

-0.72

Correlation Coefficient

Sterling Capital  Stralem Equity

Pay attention - limited upside

The 3 months correlation between Sterling and Stralem is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Behavioral and Stralem Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stralem Equity 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 Stralem Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stralem Equity has no effect on the direction of Sterling Capital i.e., Sterling Capital and Stralem Equity go up and down completely randomly.

Pair Corralation between Sterling Capital and Stralem Equity

Assuming the 90 days horizon Sterling Capital is expected to generate 1.27 times less return on investment than Stralem Equity. But when comparing it to its historical volatility, Sterling Capital Behavioral is 1.01 times less risky than Stralem Equity. It trades about 0.07 of its potential returns per unit of risk. Stralem Equity Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,233  in Stralem Equity Fund on September 16, 2024 and sell it today you would earn a total of  878.00  from holding Stralem Equity Fund or generate 39.32% return on investment over 90 days.

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

Sterling Capital Behavioral  vs.  Stralem Equity 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 fairly strong forward indicators, Sterling Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Stralem Equity

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stralem Equity Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Stralem Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sterling Capital and Stralem Equity

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

The idea behind Sterling Capital Behavioral and Stralem Equity 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.