Correlation Between American Balanced and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both American Balanced 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 American Balanced and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced and Sterling Capital Mid, you can compare the effects of market volatilities on American Balanced 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 American Balanced with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Sterling Capital.
Diversification Opportunities for American Balanced and Sterling Capital
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Sterling is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and Sterling Capital Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Mid and American Balanced 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 American Balanced 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 Mid has no effect on the direction of American Balanced i.e., American Balanced and Sterling Capital go up and down completely randomly.
Pair Corralation between American Balanced and Sterling Capital
Assuming the 90 days horizon American Balanced is expected to generate 0.55 times more return on investment than Sterling Capital. However, American Balanced is 1.83 times less risky than Sterling Capital. It trades about 0.07 of its potential returns per unit of risk. Sterling Capital Mid is currently generating about 0.0 per unit of risk. If you would invest 2,878 in American Balanced on October 23, 2024 and sell it today you would earn a total of 623.00 from holding American Balanced or generate 21.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Balanced vs. Sterling Capital Mid
Performance |
| Timeline |
| American Balanced |
| Sterling Capital Mid |
American Balanced and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Sterling Capital
The main advantage of trading using opposite American Balanced and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced 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.| American Balanced vs. Income Fund Of | American Balanced vs. Capital Income Builder | American Balanced vs. Capital World Growth | American Balanced vs. Growth Fund Of |
| Sterling Capital vs. Ridgeworth Seix Government | Sterling Capital vs. Lord Abbett Government | Sterling Capital vs. Dws Government Money | Sterling Capital vs. Dreyfus Government Cash |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |