Correlation Between Sterling Capital and Union Street
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Union Street 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 Union Street 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 Union Street Partners, you can compare the effects of market volatilities on Sterling Capital and Union Street 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 Union Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Union Street.
Diversification Opportunities for Sterling Capital and Union Street
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between STERLING and Union is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Union Street Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Street Partners 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 Union Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Street Partners has no effect on the direction of Sterling Capital i.e., Sterling Capital and Union Street go up and down completely randomly.
Pair Corralation between Sterling Capital and Union Street
Assuming the 90 days horizon Sterling Capital is expected to generate 2.86 times less return on investment than Union Street. But when comparing it to its historical volatility, Sterling Capital Short is 9.25 times less risky than Union Street. It trades about 0.15 of its potential returns per unit of risk. Union Street Partners is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,645 in Union Street Partners on September 2, 2024 and sell it today you would earn a total of 337.00 from holding Union Street Partners or generate 12.74% 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. Union Street Partners
Performance |
| Timeline |
| Sterling Capital Short |
| Union Street Partners |
Sterling Capital and Union Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Union Street
The main advantage of trading using opposite Sterling Capital and Union Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Union Street 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 Union Street will offset losses from the drop in Union Street'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 |
| Union Street vs. Union Street Partners | Union Street vs. Union Street Partners | Union Street vs. Calamos Market Neutral | Union Street vs. Fidelity Freedom 2020 |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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