Correlation Between Sterling Capital and Jhancock Short
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Jhancock 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 Jhancock 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 Jhancock Short Duration, you can compare the effects of market volatilities on Sterling Capital and Jhancock 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 Jhancock Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Jhancock Short.
Diversification Opportunities for Sterling Capital and Jhancock Short
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between STERLING and Jhancock is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Jhancock Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jhancock Short Duration 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 Jhancock Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jhancock Short Duration has no effect on the direction of Sterling Capital i.e., Sterling Capital and Jhancock Short go up and down completely randomly.
Pair Corralation between Sterling Capital and Jhancock Short
Assuming the 90 days horizon Sterling Capital is expected to generate 1.24 times less return on investment than Jhancock Short. But when comparing it to its historical volatility, Sterling Capital Short is 1.12 times less risky than Jhancock Short. It trades about 0.12 of its potential returns per unit of risk. Jhancock Short Duration is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 848.00 in Jhancock Short Duration on August 31, 2024 and sell it today you would earn a total of 88.00 from holding Jhancock Short Duration or generate 10.38% 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 Short vs. Jhancock Short Duration
Performance |
| Timeline |
| Sterling Capital Short |
| Jhancock Short Duration |
Sterling Capital and Jhancock Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Jhancock Short
The main advantage of trading using opposite Sterling Capital and Jhancock Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Jhancock 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 Jhancock Short will offset losses from the drop in Jhancock Short's long position.The idea behind Sterling Capital Short and Jhancock Short Duration 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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