Correlation Between Absolute Convertible and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible 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 Absolute Convertible and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Sterling Capital South, you can compare the effects of market volatilities on Absolute Convertible 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 Absolute Convertible with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Sterling Capital.
Diversification Opportunities for Absolute Convertible and Sterling Capital
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Absolute and Sterling is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage 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 Absolute Convertible 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 Absolute Convertible Arbitrage 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 Absolute Convertible i.e., Absolute Convertible and Sterling Capital go up and down completely randomly.
Pair Corralation between Absolute Convertible and Sterling Capital
Assuming the 90 days horizon Absolute Convertible Arbitrage is expected to generate 0.38 times more return on investment than Sterling Capital. However, Absolute Convertible Arbitrage is 2.66 times less risky than Sterling Capital. It trades about 0.54 of its potential returns per unit of risk. Sterling Capital South is currently generating about 0.05 per unit of risk. If you would invest 1,070 in Absolute Convertible Arbitrage on September 14, 2024 and sell it today you would earn a total of 81.00 from holding Absolute Convertible Arbitrage or generate 7.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Sterling Capital South
Performance |
| Timeline |
| Absolute Convertible |
| Sterling Capital South |
Absolute Convertible and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Sterling Capital
The main advantage of trading using opposite Absolute Convertible and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible 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.| Absolute Convertible vs. Allianzgi Convertible Income | Absolute Convertible vs. Lord Abbett Convertible | Absolute Convertible vs. Rationalpier 88 Convertible | Absolute Convertible vs. Virtus Convertible |
| Sterling Capital vs. Blackrock Exchange Portfolio | Sterling Capital vs. Ubs Money Series | Sterling Capital vs. Prudential Government Money | Sterling Capital vs. Hsbc Treasury Money |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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