Correlation Between Sterling Capital and Astor Long/short
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Astor Long/short 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 Astor Long/short 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 Astor Longshort Fund, you can compare the effects of market volatilities on Sterling Capital and Astor Long/short 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 Astor Long/short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Astor Long/short.
Diversification Opportunities for Sterling Capital and Astor Long/short
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between STERLING and Astor is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Astor Longshort Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astor Long/short 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 Astor Long/short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astor Long/short has no effect on the direction of Sterling Capital i.e., Sterling Capital and Astor Long/short go up and down completely randomly.
Pair Corralation between Sterling Capital and Astor Long/short
Assuming the 90 days horizon Sterling Capital is expected to generate 7.53 times less return on investment than Astor Long/short. But when comparing it to its historical volatility, Sterling Capital Short is 4.55 times less risky than Astor Long/short. It trades about 0.18 of its potential returns per unit of risk. Astor Longshort Fund is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,390 in Astor Longshort Fund on August 31, 2024 and sell it today you would earn a total of 38.00 from holding Astor Longshort Fund or generate 2.73% 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. Astor Longshort Fund
Performance |
| Timeline |
| Sterling Capital Short |
| Astor Long/short |
Sterling Capital and Astor Long/short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Astor Long/short
The main advantage of trading using opposite Sterling Capital and Astor Long/short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Astor Long/short 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 Astor Long/short will offset losses from the drop in Astor Long/short's long position.The idea behind Sterling Capital Short and Astor Longshort Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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