Correlation Between STERLING FINANCIAL and GUARANTY TRUST

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Can any of the company-specific risk be diversified away by investing in both STERLING FINANCIAL and GUARANTY TRUST 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 FINANCIAL and GUARANTY TRUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STERLING FINANCIAL HOLDINGS and GUARANTY TRUST HOLDING, you can compare the effects of market volatilities on STERLING FINANCIAL and GUARANTY TRUST 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 FINANCIAL with a short position of GUARANTY TRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of STERLING FINANCIAL and GUARANTY TRUST.

Diversification Opportunities for STERLING FINANCIAL and GUARANTY TRUST

STERLINGGUARANTYDiversified AwaySTERLINGGUARANTYDiversified Away100%
0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between STERLING and GUARANTY is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding STERLING FINANCIAL HOLDINGS and GUARANTY TRUST HOLDING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUARANTY TRUST HOLDING and STERLING FINANCIAL 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 FINANCIAL HOLDINGS are associated (or correlated) with GUARANTY TRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUARANTY TRUST HOLDING has no effect on the direction of STERLING FINANCIAL i.e., STERLING FINANCIAL and GUARANTY TRUST go up and down completely randomly.

Pair Corralation between STERLING FINANCIAL and GUARANTY TRUST

Assuming the 90 days trading horizon STERLING FINANCIAL HOLDINGS is expected to generate 2.03 times more return on investment than GUARANTY TRUST. However, STERLING FINANCIAL is 2.03 times more volatile than GUARANTY TRUST HOLDING. It trades about 0.1 of its potential returns per unit of risk. GUARANTY TRUST HOLDING is currently generating about 0.14 per unit of risk. If you would invest  480.00  in STERLING FINANCIAL HOLDINGS on October 19, 2024 and sell it today you would earn a total of  87.00  from holding STERLING FINANCIAL HOLDINGS or generate 18.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

STERLING FINANCIAL HOLDINGS  vs.  GUARANTY TRUST HOLDING

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 0102030
JavaScript chart by amCharts 3.21.15STERLINGNG GTCO
       Timeline  
STERLING FINANCIAL 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in STERLING FINANCIAL HOLDINGS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, STERLING FINANCIAL displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan4.555.566.5
GUARANTY TRUST HOLDING 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in GUARANTY TRUST HOLDING are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, GUARANTY TRUST displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan505152535455565758

STERLING FINANCIAL and GUARANTY TRUST Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.9-7.41-4.93-2.440.04142.525.137.7410.3512.95 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15STERLINGNG GTCO
       Returns  

Pair Trading with STERLING FINANCIAL and GUARANTY TRUST

The main advantage of trading using opposite STERLING FINANCIAL and GUARANTY TRUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STERLING FINANCIAL position performs unexpectedly, GUARANTY TRUST 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 GUARANTY TRUST will offset losses from the drop in GUARANTY TRUST's long position.
The idea behind STERLING FINANCIAL HOLDINGS and GUARANTY TRUST HOLDING 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.
Check out your portfolio center.
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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