Correlation Between Technology Ultrasector and Sterling Capital

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

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

Diversification Opportunities for Technology Ultrasector and Sterling Capital

-0.63

Correlation Coefficient

Technology Ultrasector  Sterling Capital

Excellent diversification

The 3 months correlation between Technology and Sterling is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Technology Ultrasector Profund 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 Technology Ultrasector 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 Technology Ultrasector Profund 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 Technology Ultrasector i.e., Technology Ultrasector and Sterling Capital go up and down completely randomly.

Pair Corralation between Technology Ultrasector and Sterling Capital

Assuming the 90 days horizon Technology Ultrasector Profund is expected to generate 5.62 times more return on investment than Sterling Capital. However, Technology Ultrasector is 5.62 times more volatile than Sterling Capital Intermediate. It trades about 0.22 of its potential returns per unit of risk. Sterling Capital Intermediate is currently generating about 0.05 per unit of risk. If you would invest  3,959  in Technology Ultrasector Profund on September 17, 2024 and sell it today you would earn a total of  236.00  from holding Technology Ultrasector Profund or generate 5.96% return on investment over 90 days.

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

Technology Ultrasector Profund  vs.  Sterling Capital Intermediate

Technology Ultrasector

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Technology Ultrasector Profund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Technology Ultrasector 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 Technology Ultrasector and Sterling Capital

The main advantage of trading using opposite Technology Ultrasector and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Ultrasector 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 Technology Ultrasector Profund 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.