Correlation Between Sterling Capital and Vanguard Information

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

Diversification Opportunities for Sterling Capital and Vanguard Information

0.18

Correlation Coefficient

Sterling Capital  Vanguard Information

Average diversification

The 3 months correlation between Sterling and Vanguard is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Stratton and Vanguard Information Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Information 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 Vanguard Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Information has no effect on the direction of Sterling Capital i.e., Sterling Capital and Vanguard Information go up and down completely randomly.

Pair Corralation between Sterling Capital and Vanguard Information

Assuming the 90 days horizon Sterling Capital Stratton is expected to under-perform the Vanguard Information. In addition to that, Sterling Capital is 1.47 times more volatile than Vanguard Information Technology. It trades about -0.13 of its total potential returns per unit of risk. Vanguard Information Technology is currently generating about 0.1 per unit of volatility. If you would invest  29,515  in Vanguard Information Technology on September 20, 2024 and sell it today you would earn a total of  2,310  from holding Vanguard Information Technology or generate 7.83% return on investment over 90 days.

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

Sterling Capital Stratton  vs.  Vanguard Information Technolog

Sterling Capital Stratton

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Vanguard Information

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Information Technology are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Information may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sterling Capital and Vanguard Information

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

The idea behind Sterling Capital Stratton and Vanguard Information Technology 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.