Correlation Between Transamerica Capital and Sterling Capital

Can any of the company-specific risk be diversified away by investing in both Transamerica 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 Transamerica 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 Transamerica Capital Growth and Sterling Capital Intermediate, you can compare the effects of market volatilities on Transamerica 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 Transamerica Capital with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Capital and Sterling Capital.

Diversification Opportunities for Transamerica Capital and Sterling Capital

-0.47

Correlation Coefficient

Transamerica Capital  Sterling Capital

Very good diversification

The 3 months correlation between Transamerica and Sterling is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Capital Growth and Sterling Capital Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Int and Transamerica 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 Transamerica Capital Growth 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 Int has no effect on the direction of Transamerica Capital i.e., Transamerica Capital and Sterling Capital go up and down completely randomly.

Pair Corralation between Transamerica Capital and Sterling Capital

Assuming the 90 days horizon Transamerica Capital Growth is expected to under-perform the Sterling Capital. In addition to that, Transamerica Capital is 9.98 times more volatile than Sterling Capital Intermediate. It trades about -0.08 of its total potential returns per unit of risk. Sterling Capital Intermediate is currently generating about -0.4 per unit of volatility. If you would invest  871.00  in Sterling Capital Intermediate on October 9, 2024 and sell it today you would lose (14.00) from holding Sterling Capital Intermediate or give up 1.61% of portfolio value over 90 days.

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

Transamerica Capital Growth  vs.  Sterling Capital Intermediate

Transamerica Capital

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Capital Growth are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Transamerica Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Sterling Capital Int

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sterling Capital Intermediate has generated negative risk-adjusted returns adding no value to fund investors. 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 Transamerica Capital and Sterling Capital

The main advantage of trading using opposite Transamerica Capital and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica 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 Transamerica Capital Growth and Sterling Capital Intermediate 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.