Correlation Between Sterling Capital and Tglix
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Tglix 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 Tglix 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 Tglix, you can compare the effects of market volatilities on Sterling Capital and Tglix 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 Tglix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Tglix.
Diversification Opportunities for Sterling Capital and Tglix
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sterling and Tglix is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Tglix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tglix 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 Tglix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tglix has no effect on the direction of Sterling Capital i.e., Sterling Capital and Tglix go up and down completely randomly.
Pair Corralation between Sterling Capital and Tglix
Assuming the 90 days horizon Sterling Capital is expected to generate 5.54 times less return on investment than Tglix. But when comparing it to its historical volatility, Sterling Capital Short is 12.71 times less risky than Tglix. It trades about 0.22 of its potential returns per unit of risk. Tglix is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,760 in Tglix on September 13, 2024 and sell it today you would earn a total of 968.00 from holding Tglix or generate 20.34% 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. Tglix
Performance |
| Timeline |
| Sterling Capital Short |
| Tglix |
Sterling Capital and Tglix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Tglix
The main advantage of trading using opposite Sterling Capital and Tglix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Tglix 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 Tglix will offset losses from the drop in Tglix's long position.| Sterling Capital vs. Champlain Small | Sterling Capital vs. Ab Small Cap | Sterling Capital vs. Df Dent Small | Sterling Capital vs. Siit Small Mid |
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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.
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