Correlation Between Sterling Capital and Value Line

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

Diversification Opportunities for Sterling Capital and Value Line

0.59

Correlation Coefficient

Sterling Capital  Value Line

Very weak diversification

The 3 months correlation between Sterling and Value is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Stratton and Value Line Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Line Small 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 Value Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Line Small has no effect on the direction of Sterling Capital i.e., Sterling Capital and Value Line go up and down completely randomly.

Pair Corralation between Sterling Capital and Value Line

Assuming the 90 days horizon Sterling Capital Stratton is expected to under-perform the Value Line. In addition to that, Sterling Capital is 2.18 times more volatile than Value Line Small. It trades about -0.11 of its total potential returns per unit of risk. Value Line Small is currently generating about 0.06 per unit of volatility. If you would invest  6,045  in Value Line Small on October 27, 2024 and sell it today you would earn a total of  216.00  from holding Value Line Small or generate 3.57% return on investment over 90 days.

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

Sterling Capital Stratton  vs.  Value Line Small

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 fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Value Line Small

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Value Line Small are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Value Line 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 Value Line

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

The idea behind Sterling Capital Stratton and Value Line Small 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.