Correlation Between Sterling Capital and Ab Impact
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Ab Impact 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 Ab Impact 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 Ab Impact Municipal, you can compare the effects of market volatilities on Sterling Capital and Ab Impact 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 Ab Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Ab Impact.
Diversification Opportunities for Sterling Capital and Ab Impact
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STERLING and ABIMX is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Ab Impact Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Impact Municipal 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 Ab Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Impact Municipal has no effect on the direction of Sterling Capital i.e., Sterling Capital and Ab Impact go up and down completely randomly.
Pair Corralation between Sterling Capital and Ab Impact
Assuming the 90 days horizon Sterling Capital is expected to generate 5.51 times less return on investment than Ab Impact. But when comparing it to its historical volatility, Sterling Capital Short is 3.94 times less risky than Ab Impact. It trades about 0.11 of its potential returns per unit of risk. Ab Impact Municipal is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 981.00 in Ab Impact Municipal on August 29, 2024 and sell it today you would earn a total of 13.00 from holding Ab Impact Municipal or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Short vs. Ab Impact Municipal
Performance |
| Timeline |
| Sterling Capital Short |
| Ab Impact Municipal |
Sterling Capital and Ab Impact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Ab Impact
The main advantage of trading using opposite Sterling Capital and Ab Impact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Ab Impact 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 Ab Impact will offset losses from the drop in Ab Impact's long position.| Sterling Capital vs. Permanent Portfolio Class | Sterling Capital vs. HUMANA INC | Sterling Capital vs. Aquagold International | Sterling Capital vs. Barloworld Ltd ADR |
| Ab Impact vs. HUMANA INC | Ab Impact vs. Aquagold International | Ab Impact vs. Barloworld Ltd ADR | Ab Impact vs. Morningstar Unconstrained Allocation |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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