Correlation Between Sterling Capital and T Rowe
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and T Rowe 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 T Rowe 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 T Rowe Price, you can compare the effects of market volatilities on Sterling Capital and T Rowe 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 T Rowe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and T Rowe.
Diversification Opportunities for Sterling Capital and T Rowe
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STERLING and PRINX is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price 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 T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of Sterling Capital i.e., Sterling Capital and T Rowe go up and down completely randomly.
Pair Corralation between Sterling Capital and T Rowe
Assuming the 90 days horizon Sterling Capital is expected to generate 1.48 times less return on investment than T Rowe. But when comparing it to its historical volatility, Sterling Capital Short is 2.05 times less risky than T Rowe. It trades about 0.18 of its potential returns per unit of risk. T Rowe Price is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,101 in T Rowe Price on September 2, 2024 and sell it today you would earn a total of 44.00 from holding T Rowe Price or generate 4.0% 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. T Rowe Price
Performance |
| Timeline |
| Sterling Capital Short |
| T Rowe Price |
Sterling Capital and T Rowe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and T Rowe
The main advantage of trading using opposite Sterling Capital and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe'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 |
| T Rowe vs. Barings Active Short | T Rowe vs. Maryland Short Term Tax Free | T Rowe vs. Goldman Sachs Short Term | T Rowe vs. Franklin Federal Limited Term |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |