Correlation Between Sterling Capital and Smallcap Growth
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Smallcap Growth 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 Smallcap Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital North and Smallcap Growth Fund, you can compare the effects of market volatilities on Sterling Capital and Smallcap Growth 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 Smallcap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Smallcap Growth.
Diversification Opportunities for Sterling Capital and Smallcap Growth
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sterling and Smallcap is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital North and Smallcap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Growth 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 North are associated (or correlated) with Smallcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Growth has no effect on the direction of Sterling Capital i.e., Sterling Capital and Smallcap Growth go up and down completely randomly.
Pair Corralation between Sterling Capital and Smallcap Growth
Assuming the 90 days horizon Sterling Capital is expected to generate 5.97 times less return on investment than Smallcap Growth. But when comparing it to its historical volatility, Sterling Capital North is 6.97 times less risky than Smallcap Growth. It trades about 0.06 of its potential returns per unit of risk. Smallcap Growth Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,392 in Smallcap Growth Fund on September 12, 2024 and sell it today you would earn a total of 304.00 from holding Smallcap Growth Fund or generate 21.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Sterling Capital North vs. Smallcap Growth Fund
Performance |
| Timeline |
| Sterling Capital North |
| Smallcap Growth |
Sterling Capital and Smallcap Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Smallcap Growth
The main advantage of trading using opposite Sterling Capital and Smallcap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Smallcap Growth 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 Smallcap Growth will offset losses from the drop in Smallcap Growth's long position.| Sterling Capital vs. Smallcap Growth Fund | Sterling Capital vs. Glg Intl Small | Sterling Capital vs. Sp Smallcap 600 | Sterling Capital vs. Small Pany Growth |
| Smallcap Growth vs. Allianzgi Diversified Income | Smallcap Growth vs. Global Diversified Income | Smallcap Growth vs. Aqr Diversified Arbitrage | Smallcap Growth vs. Guggenheim Diversified Income |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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