Correlation Between Sterling Capital and Federated Mdt
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Federated Mdt 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 Federated Mdt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital Equity and Federated Mdt Small, you can compare the effects of market volatilities on Sterling Capital and Federated Mdt 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 Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Federated Mdt.
Diversification Opportunities for Sterling Capital and Federated Mdt
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sterling and Federated is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Equity and Federated Mdt Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Small 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 Equity are associated (or correlated) with Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Small has no effect on the direction of Sterling Capital i.e., Sterling Capital and Federated Mdt go up and down completely randomly.
Pair Corralation between Sterling Capital and Federated Mdt
Assuming the 90 days horizon Sterling Capital is expected to generate 2.12 times less return on investment than Federated Mdt. But when comparing it to its historical volatility, Sterling Capital Equity is 2.0 times less risky than Federated Mdt. It trades about 0.11 of its potential returns per unit of risk. Federated Mdt Small is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,506 in Federated Mdt Small on September 1, 2024 and sell it today you would earn a total of 511.00 from holding Federated Mdt Small or generate 20.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Equity vs. Federated Mdt Small
Performance |
| Timeline |
| Sterling Capital Equity |
| Federated Mdt Small |
Sterling Capital and Federated Mdt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Federated Mdt
The main advantage of trading using opposite Sterling Capital and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Federated Mdt 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 Federated Mdt will offset losses from the drop in Federated Mdt's long position.| Sterling Capital vs. Sterling Capital Special | Sterling Capital vs. Sterling Capital Total | Sterling Capital vs. Touchstone Sands Capital | Sterling Capital vs. Aquagold International |
| Federated Mdt vs. Touchstone Mid Cap | Federated Mdt vs. Virtus Kar Small Cap | Federated Mdt vs. Mid Cap Growth | Federated Mdt vs. Harding Loevner International |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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