Correlation Between Sterling Capital and Science Technology
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Science 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 Science 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 Science Technology Fund, you can compare the effects of market volatilities on Sterling Capital and Science 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 Science Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Science Technology.
Diversification Opportunities for Sterling Capital and Science Technology
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STERLING and Science is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Science Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science 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 Science Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Technology has no effect on the direction of Sterling Capital i.e., Sterling Capital and Science Technology go up and down completely randomly.
Pair Corralation between Sterling Capital and Science Technology
Assuming the 90 days horizon Sterling Capital is expected to generate 14.22 times less return on investment than Science Technology. But when comparing it to its historical volatility, Sterling Capital Short is 16.17 times less risky than Science Technology. It trades about 0.18 of its potential returns per unit of risk. Science Technology Fund is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,735 in Science Technology Fund on August 31, 2024 and sell it today you would earn a total of 137.00 from holding Science Technology Fund or generate 5.01% 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. Science Technology Fund
Performance |
| Timeline |
| Sterling Capital Short |
| Science Technology |
Sterling Capital and Science Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Science Technology
The main advantage of trading using opposite Sterling Capital and Science Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Science 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 Science Technology will offset losses from the drop in Science Technology's long position.The idea behind Sterling Capital Short and Science Technology Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Science Technology vs. Barings Active Short | Science Technology vs. Sterling Capital Short | Science Technology vs. The Short Term | Science Technology vs. Aqr Sustainable Long Short |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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