Correlation Between Sterling Capital and Energy Basic
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Energy Basic 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 Energy Basic 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 Energy Basic Materials, you can compare the effects of market volatilities on Sterling Capital and Energy Basic 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 Energy Basic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Energy Basic.
Diversification Opportunities for Sterling Capital and Energy Basic
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STERLING and Energy is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Energy Basic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Basic Materials 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 Energy Basic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Basic Materials has no effect on the direction of Sterling Capital i.e., Sterling Capital and Energy Basic go up and down completely randomly.
Pair Corralation between Sterling Capital and Energy Basic
Assuming the 90 days horizon Sterling Capital is expected to generate 18.58 times less return on investment than Energy Basic. But when comparing it to its historical volatility, Sterling Capital Short is 5.46 times less risky than Energy Basic. It trades about 0.18 of its potential returns per unit of risk. Energy Basic Materials is currently generating about 0.62 of returns per unit of risk over similar time horizon. If you would invest 1,260 in Energy Basic Materials on October 29, 2024 and sell it today you would earn a total of 87.00 from holding Energy Basic Materials or generate 6.9% 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. Energy Basic Materials
Performance |
| Timeline |
| Sterling Capital Short |
| Energy Basic Materials |
Sterling Capital and Energy Basic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Energy Basic
The main advantage of trading using opposite Sterling Capital and Energy Basic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Energy Basic 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 Energy Basic will offset losses from the drop in Energy Basic's long position.| Sterling Capital vs. Fidelity Capital Income | Sterling Capital vs. Tiaa Cref High Yield Fund | Sterling Capital vs. Guggenheim High Yield | Sterling Capital vs. Artisan High Income |
| Energy Basic vs. T Rowe Price | Energy Basic vs. Blrc Sgy Mnp | Energy Basic vs. Metropolitan West Porate | Energy Basic vs. Versatile Bond Portfolio |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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