Correlation Between Sterling Capital and Dreyfus Natural
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Dreyfus Natural 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 Dreyfus Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital Special and Dreyfus Natural Resources, you can compare the effects of market volatilities on Sterling Capital and Dreyfus Natural 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 Dreyfus Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Dreyfus Natural.
Diversification Opportunities for Sterling Capital and Dreyfus Natural
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sterling and Dreyfus is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Special and Dreyfus Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Natural Resources 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 Special are associated (or correlated) with Dreyfus Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Natural Resources has no effect on the direction of Sterling Capital i.e., Sterling Capital and Dreyfus Natural go up and down completely randomly.
Pair Corralation between Sterling Capital and Dreyfus Natural
Assuming the 90 days horizon Sterling Capital is expected to generate 1.1 times less return on investment than Dreyfus Natural. But when comparing it to its historical volatility, Sterling Capital Special is 1.2 times less risky than Dreyfus Natural. It trades about 0.3 of its potential returns per unit of risk. Dreyfus Natural Resources is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 4,124 in Dreyfus Natural Resources on September 2, 2024 and sell it today you would earn a total of 265.00 from holding Dreyfus Natural Resources or generate 6.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Special vs. Dreyfus Natural Resources
Performance |
| Timeline |
| Sterling Capital Special |
| Dreyfus Natural Resources |
Sterling Capital and Dreyfus Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Dreyfus Natural
The main advantage of trading using opposite Sterling Capital and Dreyfus Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Dreyfus Natural 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 Dreyfus Natural will offset losses from the drop in Dreyfus Natural's long position.| Sterling Capital vs. Alger Health Sciences | Sterling Capital vs. Blackrock Health Sciences | Sterling Capital vs. Delaware Healthcare Fund | Sterling Capital vs. Tekla Healthcare Opportunities |
| Dreyfus Natural vs. Dreyfusstandish Global Fixed | Dreyfus Natural vs. Dreyfusstandish Global Fixed | Dreyfus Natural vs. Dreyfus High Yield | Dreyfus Natural vs. Dreyfus High Yield |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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