Correlation Between VFD GROUP and STERLING FINANCIAL

Can any of the company-specific risk be diversified away by investing in both VFD GROUP and STERLING FINANCIAL 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 VFD GROUP and STERLING FINANCIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VFD GROUP and STERLING FINANCIAL HOLDINGS, you can compare the effects of market volatilities on VFD GROUP and STERLING FINANCIAL 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 VFD GROUP with a short position of STERLING FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of VFD GROUP and STERLING FINANCIAL.

Diversification Opportunities for VFD GROUP and STERLING FINANCIAL

0.01

Correlation Coefficient

VFD GROUP  STERLING FINANCIAL

Significant diversification

The 3 months correlation between VFD and STERLING is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding VFD GROUP and STERLING FINANCIAL HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STERLING FINANCIAL and VFD GROUP 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 VFD GROUP are associated (or correlated) with STERLING FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STERLING FINANCIAL has no effect on the direction of VFD GROUP i.e., VFD GROUP and STERLING FINANCIAL go up and down completely randomly.

Pair Corralation between VFD GROUP and STERLING FINANCIAL

Assuming the 90 days trading horizon VFD GROUP is expected to generate 0.84 times more return on investment than STERLING FINANCIAL. However, VFD GROUP is 1.19 times less risky than STERLING FINANCIAL. It trades about 0.12 of its potential returns per unit of risk. STERLING FINANCIAL HOLDINGS is currently generating about 0.05 per unit of risk. If you would invest  4,450  in VFD GROUP on December 5, 2024 and sell it today you would earn a total of  790.00  from holding VFD GROUP or generate 17.75% return on investment over 90 days.

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

VFD GROUP  vs.  STERLING FINANCIAL HOLDINGS

VFD GROUP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VFD GROUP are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, VFD GROUP unveiled solid returns over the last few months and may actually be approaching a breakup point.

STERLING FINANCIAL

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in STERLING FINANCIAL HOLDINGS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, STERLING FINANCIAL may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with VFD GROUP and STERLING FINANCIAL

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

The idea behind VFD GROUP and STERLING FINANCIAL HOLDINGS 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.