Correlation Between Sterling Capital and Equity Growth
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Equity 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 Equity Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital Short and Equity Growth Fund, you can compare the effects of market volatilities on Sterling Capital and Equity 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 Equity Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Equity Growth.
Diversification Opportunities for Sterling Capital and Equity Growth
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STERLING and Equity is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Equity Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity 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 Short are associated (or correlated) with Equity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Growth has no effect on the direction of Sterling Capital i.e., Sterling Capital and Equity Growth go up and down completely randomly.
Pair Corralation between Sterling Capital and Equity Growth
Assuming the 90 days horizon Sterling Capital is expected to generate 45.75 times less return on investment than Equity Growth. But when comparing it to its historical volatility, Sterling Capital Short is 9.5 times less risky than Equity Growth. It trades about 0.07 of its potential returns per unit of risk. Equity Growth Fund is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 3,273 in Equity Growth Fund on September 2, 2024 and sell it today you would earn a total of 182.00 from holding Equity Growth Fund or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Short vs. Equity Growth Fund
Performance |
| Timeline |
| Sterling Capital Short |
| Equity Growth |
Sterling Capital and Equity Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Equity Growth
The main advantage of trading using opposite Sterling Capital and Equity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Equity 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 Equity Growth will offset losses from the drop in Equity Growth's long position.| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital South | Sterling Capital vs. Sterling Capital South |
| Equity Growth vs. Touchstone Large Cap | Equity Growth vs. Morningstar Unconstrained Allocation | Equity Growth vs. Goldman Sachs Large | Equity Growth vs. Principal Lifetime Hybrid |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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