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 Short, 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
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Sterling is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund 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 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 Short 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 generate 21.1 times more return on investment than Sterling Capital. However, Global Gold is 21.1 times more volatile than Sterling Capital Short. It trades about 0.08 of its potential returns per unit of risk. Sterling Capital Short is currently generating about 0.14 per unit of risk. If you would invest 1,265 in Global Gold Fund on September 12, 2024 and sell it today you would earn a total of 32.00 from holding Global Gold Fund or generate 2.53% 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 Short
Performance |
| Timeline |
| Global Gold Fund |
| Sterling Capital Short |
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. Technology Ultrasector Profund | Global Gold vs. Towpath Technology | Global Gold vs. Columbia Global Technology | Global Gold vs. Goldman Sachs Technology |
| Sterling Capital vs. Blackrock Short Term Inflat Protected | Sterling Capital vs. Boston Partners Longshort | Sterling Capital vs. Astor Longshort Fund | Sterling Capital vs. Angel Oak Ultrashort |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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