Correlation Between Sterling Capital and Sterling Capital

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

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

Diversification Opportunities for Sterling Capital and Sterling Capital

0.67

Correlation Coefficient

Sterling Capital  Sterling Capital

Poor diversification

The 3 months correlation between Sterling and Sterling is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Stratton and Sterling Capital Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Ultra 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 Stratton 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 Ultra has no effect on the direction of Sterling Capital i.e., Sterling Capital and Sterling Capital go up and down completely randomly.

Pair Corralation between Sterling Capital and Sterling Capital

Assuming the 90 days horizon Sterling Capital Stratton is expected to generate 12.24 times more return on investment than Sterling Capital. However, Sterling Capital is 12.24 times more volatile than Sterling Capital Ultra. It trades about 0.05 of its potential returns per unit of risk. Sterling Capital Ultra is currently generating about 0.22 per unit of risk. If you would invest  3,510  in Sterling Capital Stratton on December 28, 2024 and sell it today you would earn a total of  94.00  from holding Sterling Capital Stratton or generate 2.68% return on investment over 90 days.

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

Sterling Capital Stratton  vs.  Sterling Capital Ultra

Sterling Capital Stratton

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Stratton are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Sterling Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sterling Capital Ultra

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Ultra are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Sterling Capital and Sterling Capital

The main advantage of trading using opposite Sterling Capital and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital 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 Sterling Capital Stratton and Sterling Capital Ultra 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.