Correlation Between Sterling Capital and American Mutual
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and American Mutual 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 American Mutual 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 American Mutual Fund, you can compare the effects of market volatilities on Sterling Capital and American Mutual 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 American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and American Mutual.
Diversification Opportunities for Sterling Capital and American Mutual
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between STERLING and American is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual 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 American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Sterling Capital i.e., Sterling Capital and American Mutual go up and down completely randomly.
Pair Corralation between Sterling Capital and American Mutual
Assuming the 90 days horizon Sterling Capital is expected to generate 8.41 times less return on investment than American Mutual. But when comparing it to its historical volatility, Sterling Capital Short is 6.61 times less risky than American Mutual. It trades about 0.11 of its potential returns per unit of risk. American Mutual Fund is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5,928 in American Mutual Fund on August 29, 2024 and sell it today you would earn a total of 119.00 from holding American Mutual Fund or generate 2.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Short vs. American Mutual Fund
Performance |
| Timeline |
| Sterling Capital Short |
| American Mutual |
Sterling Capital and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and American Mutual
The main advantage of trading using opposite Sterling Capital and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual'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 |
| American Mutual vs. Multisector Bond Sma | American Mutual vs. Sterling Capital Short | American Mutual vs. Nebraska Municipal Fund | American Mutual vs. Artisan High Income |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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