Correlation Between Sterling Capital and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Prudential Jennison 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 Prudential Jennison 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 Prudential Jennison Growth, you can compare the effects of market volatilities on Sterling Capital and Prudential Jennison 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 Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Prudential Jennison.
Diversification Opportunities for Sterling Capital and Prudential Jennison
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STERLING and Prudential is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Prudential Jennison Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison 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 Prudential Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Jennison has no effect on the direction of Sterling Capital i.e., Sterling Capital and Prudential Jennison go up and down completely randomly.
Pair Corralation between Sterling Capital and Prudential Jennison
Assuming the 90 days horizon Sterling Capital is expected to generate 46.7 times less return on investment than Prudential Jennison. But when comparing it to its historical volatility, Sterling Capital Short is 11.64 times less risky than Prudential Jennison. It trades about 0.07 of its potential returns per unit of risk. Prudential Jennison Growth is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 7,291 in Prudential Jennison Growth on September 2, 2024 and sell it today you would earn a total of 412.00 from holding Prudential Jennison Growth or generate 5.65% 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. Prudential Jennison Growth
Performance |
| Timeline |
| Sterling Capital Short |
| Prudential Jennison |
Sterling Capital and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Prudential Jennison
The main advantage of trading using opposite Sterling Capital and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Prudential Jennison 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 Prudential Jennison will offset losses from the drop in Prudential Jennison'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 |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |