Correlation Between Sterling Capital and Kensington Managed
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Kensington Managed 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 Kensington Managed 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 Kensington Managed Income, you can compare the effects of market volatilities on Sterling Capital and Kensington Managed 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 Kensington Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Kensington Managed.
Diversification Opportunities for Sterling Capital and Kensington Managed
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sterling and Kensington is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Kensington Managed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Managed Income 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 Kensington Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Managed Income has no effect on the direction of Sterling Capital i.e., Sterling Capital and Kensington Managed go up and down completely randomly.
Pair Corralation between Sterling Capital and Kensington Managed
Assuming the 90 days horizon Sterling Capital Short is expected to generate 0.87 times more return on investment than Kensington Managed. However, Sterling Capital Short is 1.15 times less risky than Kensington Managed. It trades about 0.19 of its potential returns per unit of risk. Kensington Managed Income is currently generating about 0.1 per unit of risk. If you would invest 833.00 in Sterling Capital Short on November 28, 2024 and sell it today you would earn a total of 4.00 from holding Sterling Capital Short or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sterling Capital Short vs. Kensington Managed Income
Performance |
| Timeline |
| Sterling Capital Short |
| Kensington Managed Income |
Sterling Capital and Kensington Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Kensington Managed
The main advantage of trading using opposite Sterling Capital and Kensington Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Kensington Managed 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 Kensington Managed will offset losses from the drop in Kensington Managed's long position.| Sterling Capital vs. Hartford Moderate Allocation | Sterling Capital vs. American Funds Retirement | Sterling Capital vs. Wealthbuilder Moderate Balanced | Sterling Capital vs. Voya Retirement Growth |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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