Correlation Between Sterling Capital and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Franklin Federal 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 Franklin Federal 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 Franklin Federal Limited Term, you can compare the effects of market volatilities on Sterling Capital and Franklin Federal 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 Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Franklin Federal.
Diversification Opportunities for Sterling Capital and Franklin Federal
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STERLING and Franklin is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Franklin Federal Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Lim 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 Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Lim has no effect on the direction of Sterling Capital i.e., Sterling Capital and Franklin Federal go up and down completely randomly.
Pair Corralation between Sterling Capital and Franklin Federal
Assuming the 90 days horizon Sterling Capital Short is expected to generate 1.28 times more return on investment than Franklin Federal. However, Sterling Capital is 1.28 times more volatile than Franklin Federal Limited Term. It trades about 0.15 of its potential returns per unit of risk. Franklin Federal Limited Term is currently generating about 0.18 per unit of risk. If you would invest 797.00 in Sterling Capital Short on September 2, 2024 and sell it today you would earn a total of 39.00 from holding Sterling Capital Short or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Short vs. Franklin Federal Limited Term
Performance |
| Timeline |
| Sterling Capital Short |
| Franklin Federal Lim |
Sterling Capital and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Franklin Federal
The main advantage of trading using opposite Sterling Capital and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Franklin Federal 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 Franklin Federal will offset losses from the drop in Franklin Federal'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 |
| Franklin Federal vs. Eip Growth And | Franklin Federal vs. Kinetics Small Cap | Franklin Federal vs. Chase Growth Fund | Franklin Federal vs. T Rowe Price |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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