Correlation Between Global Gold and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Global Gold 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 Global Gold and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Gold Fund and Sterling Capital South, you can compare the effects of market volatilities on Global Gold 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 Global Gold with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Sterling Capital.
Diversification Opportunities for Global Gold and Sterling Capital
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GLOBAL and Sterling is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Sterling Capital South in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital South and Global Gold 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 Global Gold Fund 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 South has no effect on the direction of Global Gold i.e., Global Gold and Sterling Capital go up and down completely randomly.
Pair Corralation between Global Gold and Sterling Capital
Assuming the 90 days horizon Global Gold Fund is expected to under-perform the Sterling Capital. In addition to that, Global Gold is 9.66 times more volatile than Sterling Capital South. It trades about -0.18 of its total potential returns per unit of risk. Sterling Capital South is currently generating about 0.2 per unit of volatility. If you would invest 1,042 in Sterling Capital South on September 4, 2024 and sell it today you would earn a total of 9.00 from holding Sterling Capital South or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Gold Fund vs. Sterling Capital South
Performance |
| Timeline |
| Global Gold Fund |
| Sterling Capital South |
Global Gold and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Sterling Capital
The main advantage of trading using opposite Global Gold and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold 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.| Global Gold vs. Putnam Convertible Incm Gwth | Global Gold vs. Rationalpier 88 Convertible | Global Gold vs. Advent Claymore Convertible | Global Gold vs. Gabelli Convertible And |
| Sterling Capital vs. Cref Inflation Linked Bond | Sterling Capital vs. Ab Bond Inflation | Sterling Capital vs. Blackrock Inflation Protected | Sterling Capital vs. Lord Abbett Inflation |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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