Correlation Between Sterling Capital and Global Technology
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Global Technology 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 Sterling Capital and Global Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital Behavioral and Global Technology Portfolio, you can compare the effects of market volatilities on Sterling Capital and Global Technology 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 Sterling Capital with a short position of Global Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Global Technology.
Diversification Opportunities for Sterling Capital and Global Technology
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sterling and Global is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Behavioral and Global Technology Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Technology and Sterling Capital 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 Sterling Capital Behavioral are associated (or correlated) with Global Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Technology has no effect on the direction of Sterling Capital i.e., Sterling Capital and Global Technology go up and down completely randomly.
Pair Corralation between Sterling Capital and Global Technology
Assuming the 90 days horizon Sterling Capital is expected to generate 1.93 times less return on investment than Global Technology. But when comparing it to its historical volatility, Sterling Capital Behavioral is 1.62 times less risky than Global Technology. It trades about 0.1 of its potential returns per unit of risk. Global Technology Portfolio is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,105 in Global Technology Portfolio on September 3, 2024 and sell it today you would earn a total of 1,034 from holding Global Technology Portfolio or generate 93.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Behavioral vs. Global Technology Portfolio
Performance |
| Timeline |
| Sterling Capital Beh |
| Global Technology |
Sterling Capital and Global Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Global Technology
The main advantage of trading using opposite Sterling Capital and Global Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Global Technology 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 Global Technology will offset losses from the drop in Global Technology's long position.| Sterling Capital vs. Dodge Cox Stock | Sterling Capital vs. American Funds American | Sterling Capital vs. American Funds American | Sterling Capital vs. American Mutual Fund |
| Global Technology vs. Vanguard Information Technology | Global Technology vs. Technology Portfolio Technology | Global Technology vs. Fidelity Select Semiconductors | Global Technology vs. Software And It |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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