Correlation Between Adams Diversified and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Adams Diversified 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 Adams Diversified and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adams Diversified Equity and Sterling Capital Short, you can compare the effects of market volatilities on Adams Diversified 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 Adams Diversified with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Diversified and Sterling Capital.
Diversification Opportunities for Adams Diversified and Sterling Capital
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Adams and STERLING is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Adams Diversified Equity and Sterling Capital Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Short and Adams Diversified 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 Adams Diversified Equity 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 Short has no effect on the direction of Adams Diversified i.e., Adams Diversified and Sterling Capital go up and down completely randomly.
Pair Corralation between Adams Diversified and Sterling Capital
Considering the 90-day investment horizon Adams Diversified Equity is expected to generate 7.83 times more return on investment than Sterling Capital. However, Adams Diversified is 7.83 times more volatile than Sterling Capital Short. It trades about 0.11 of its potential returns per unit of risk. Sterling Capital Short is currently generating about 0.18 per unit of risk. If you would invest 1,830 in Adams Diversified Equity on September 1, 2024 and sell it today you would earn a total of 227.00 from holding Adams Diversified Equity or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adams Diversified Equity vs. Sterling Capital Short
Performance |
| Timeline |
| Adams Diversified Equity |
| Sterling Capital Short |
Adams Diversified and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Diversified and Sterling Capital
The main advantage of trading using opposite Adams Diversified and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Diversified 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.| Adams Diversified vs. Tri Continental Closed | Adams Diversified vs. SRH Total Return | Adams Diversified vs. Putnam Municipal Opportunities | Adams Diversified vs. Tortoise Energy Independence |
| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital South | Sterling Capital vs. Sterling Capital South |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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