Correlation Between Blackrock International and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Blackrock International 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 Blackrock International and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock International Dividend and Sterling Capital Total, you can compare the effects of market volatilities on Blackrock International 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 Blackrock International with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock International and Sterling Capital.
Diversification Opportunities for Blackrock International and Sterling Capital
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Blackrock and Sterling is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock International Divide and Sterling Capital Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Total and Blackrock International 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 Blackrock International Dividend 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 Total has no effect on the direction of Blackrock International i.e., Blackrock International and Sterling Capital go up and down completely randomly.
Pair Corralation between Blackrock International and Sterling Capital
Assuming the 90 days horizon Blackrock International is expected to generate 1.37 times less return on investment than Sterling Capital. In addition to that, Blackrock International is 2.99 times more volatile than Sterling Capital Total. It trades about 0.02 of its total potential returns per unit of risk. Sterling Capital Total is currently generating about 0.08 per unit of volatility. If you would invest 952.00 in Sterling Capital Total on September 14, 2024 and sell it today you would earn a total of 51.00 from holding Sterling Capital Total or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Blackrock International Divide vs. Sterling Capital Total
Performance |
| Timeline |
| Blackrock International |
| Sterling Capital Total |
Blackrock International and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock International and Sterling Capital
The main advantage of trading using opposite Blackrock International and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock International 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.The idea behind Blackrock International Dividend and Sterling Capital Total 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.
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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