Correlation Between Sterling Capital and Guidemark Smallmid

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

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

Diversification Opportunities for Sterling Capital and Guidemark Smallmid

-0.48

Correlation Coefficient

Sterling Capital  Guidemark Smallmid

Very good diversification

The 3 months correlation between Sterling and Guidemark is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Securitized and Guidemark Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Smallmid Cap 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 Securitized are associated (or correlated) with Guidemark Smallmid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Smallmid Cap has no effect on the direction of Sterling Capital i.e., Sterling Capital and Guidemark Smallmid go up and down completely randomly.

Pair Corralation between Sterling Capital and Guidemark Smallmid

Assuming the 90 days horizon Sterling Capital Securitized is expected to under-perform the Guidemark Smallmid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Sterling Capital Securitized is 4.07 times less risky than Guidemark Smallmid. The mutual fund trades about -0.18 of its potential returns per unit of risk. The Guidemark Smallmid Cap is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,074  in Guidemark Smallmid Cap on September 17, 2024 and sell it today you would earn a total of  161.00  from holding Guidemark Smallmid Cap or generate 7.76% return on investment over 90 days.

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

Sterling Capital Securitized  vs.  Guidemark Smallmid Cap

Sterling Capital Sec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sterling Capital Securitized has generated negative risk-adjusted returns adding no value to fund investors. 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.

Guidemark Smallmid Cap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark Smallmid Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Guidemark Smallmid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sterling Capital and Guidemark Smallmid

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

The idea behind Sterling Capital Securitized and Guidemark Smallmid Cap 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.