Correlation Between California High and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both California High and Sterling Capital 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 California High and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Sterling Capital Behavioral, you can compare the effects of market volatilities on California High and Sterling Capital 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 California High with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High and Sterling Capital.
Diversification Opportunities for California High and Sterling Capital
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between California and Sterling is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Sterling Capital Behavioral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Beh and California High 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 California High Yield Municipal are associated (or correlated) with Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Beh has no effect on the direction of California High i.e., California High and Sterling Capital go up and down completely randomly.
Pair Corralation between California High and Sterling Capital
Assuming the 90 days horizon California High is expected to generate 1.9 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, California High Yield Municipal is 4.2 times less risky than Sterling Capital. It trades about 0.41 of its potential returns per unit of risk. Sterling Capital Behavioral is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,002 in Sterling Capital Behavioral on September 13, 2024 and sell it today you would earn a total of 23.00 from holding Sterling Capital Behavioral or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
California High Yield Municipa vs. Sterling Capital Behavioral
Performance |
| Timeline |
| California High Yield |
| Sterling Capital Beh |
California High and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High and Sterling Capital
The main advantage of trading using opposite California High and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| California High vs. Franklin Gold Precious | California High vs. Invesco Gold Special | California High vs. Great West Goldman Sachs | California High vs. Vy Goldman Sachs |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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