Correlation Between Sterling Capital and Towpath Technology
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Towpath Technology 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 Towpath Technology 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 Towpath Technology, you can compare the effects of market volatilities on Sterling Capital and Towpath Technology 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 Towpath Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Towpath Technology.
Diversification Opportunities for Sterling Capital and Towpath Technology
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sterling and Towpath is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Towpath Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Towpath Technology 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 Towpath Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Towpath Technology has no effect on the direction of Sterling Capital i.e., Sterling Capital and Towpath Technology go up and down completely randomly.
Pair Corralation between Sterling Capital and Towpath Technology
Assuming the 90 days horizon Sterling Capital is expected to generate 27.6 times less return on investment than Towpath Technology. But when comparing it to its historical volatility, Sterling Capital Short is 8.58 times less risky than Towpath Technology. It trades about 0.09 of its potential returns per unit of risk. Towpath Technology is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,416 in Towpath Technology on November 5, 2024 and sell it today you would earn a total of 50.00 from holding Towpath Technology or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Sterling Capital Short vs. Towpath Technology
Performance |
| Timeline |
| Sterling Capital Short |
| Towpath Technology |
Sterling Capital and Towpath Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Towpath Technology
The main advantage of trading using opposite Sterling Capital and Towpath Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Towpath Technology 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 Towpath Technology will offset losses from the drop in Towpath Technology's long position.| Sterling Capital vs. Mirova Global Green | Sterling Capital vs. Dws Global Macro | Sterling Capital vs. Scharf Global Opportunity | Sterling Capital vs. Gmo Global Equity |
| Towpath Technology vs. Lord Abbett Small | Towpath Technology vs. Mutual Of America | Towpath Technology vs. Small Cap Value Profund | Towpath Technology vs. Victory Rs Partners |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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