Correlation Between Sterling Capital and Barings Active
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Barings Active 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 Barings Active 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 Barings Active Short, you can compare the effects of market volatilities on Sterling Capital and Barings Active 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 Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Barings Active.
Diversification Opportunities for Sterling Capital and Barings Active
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between STERLING and Barings is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Barings Active Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Active Short 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 Barings Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Active Short has no effect on the direction of Sterling Capital i.e., Sterling Capital and Barings Active go up and down completely randomly.
Pair Corralation between Sterling Capital and Barings Active
Assuming the 90 days horizon Sterling Capital is expected to generate 1.36 times less return on investment than Barings Active. But when comparing it to its historical volatility, Sterling Capital Short is 1.4 times less risky than Barings Active. It trades about 0.11 of its potential returns per unit of risk. Barings Active Short is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 917.00 in Barings Active Short on August 29, 2024 and sell it today you would earn a total of 3.00 from holding Barings Active Short or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Short vs. Barings Active Short
Performance |
| Timeline |
| Sterling Capital Short |
| Barings Active Short |
Sterling Capital and Barings Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Barings Active
The main advantage of trading using opposite Sterling Capital and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Barings Active 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 Barings Active will offset losses from the drop in Barings Active'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 |
| Barings Active vs. Permanent Portfolio Class | Barings Active vs. HUMANA INC | Barings Active vs. Aquagold International | Barings Active vs. Barloworld Ltd ADR |
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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