Correlation Between Sterling Capital and Monteagle Enhanced

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

Diversification Opportunities for Sterling Capital and Monteagle Enhanced

0.85

Correlation Coefficient

Sterling Capital  Monteagle Enhanced

Very poor diversification

The 3 months correlation between Sterling and Monteagle is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Stratton and Monteagle Enhanced Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monteagle Enhanced 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 Stratton are associated (or correlated) with Monteagle Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monteagle Enhanced Equity has no effect on the direction of Sterling Capital i.e., Sterling Capital and Monteagle Enhanced go up and down completely randomly.

Pair Corralation between Sterling Capital and Monteagle Enhanced

Assuming the 90 days horizon Sterling Capital Stratton is expected to generate 1.14 times more return on investment than Monteagle Enhanced. However, Sterling Capital is 1.14 times more volatile than Monteagle Enhanced Equity. It trades about -0.05 of its potential returns per unit of risk. Monteagle Enhanced Equity is currently generating about -0.15 per unit of risk. If you would invest  5,751  in Sterling Capital Stratton on December 23, 2024 and sell it today you would lose (181.00) from holding Sterling Capital Stratton or give up 3.15% of portfolio value over 90 days.

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

Sterling Capital Stratton  vs.  Monteagle Enhanced Equity

Sterling Capital Stratton

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sterling Capital Stratton has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Sterling Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Monteagle Enhanced Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monteagle Enhanced Equity 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 Monteagle Enhanced

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

The idea behind Sterling Capital Stratton and Monteagle Enhanced Equity 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.