Correlation Between Sterling Capital and Nationwide Fund6
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Nationwide Fund6 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 Nationwide Fund6 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 Nationwide Fund6, you can compare the effects of market volatilities on Sterling Capital and Nationwide Fund6 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 Nationwide Fund6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Nationwide Fund6.
Diversification Opportunities for Sterling Capital and Nationwide Fund6
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sterling and Nationwide is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Nationwide Fund6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Fund6 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 Nationwide Fund6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Fund6 has no effect on the direction of Sterling Capital i.e., Sterling Capital and Nationwide Fund6 go up and down completely randomly.
Pair Corralation between Sterling Capital and Nationwide Fund6
Assuming the 90 days horizon Sterling Capital is expected to generate 3.91 times less return on investment than Nationwide Fund6. But when comparing it to its historical volatility, Sterling Capital Short is 6.71 times less risky than Nationwide Fund6. It trades about 0.19 of its potential returns per unit of risk. Nationwide Fund6 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,114 in Nationwide Fund6 on September 1, 2024 and sell it today you would earn a total of 381.00 from holding Nationwide Fund6 or generate 12.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Sterling Capital Short vs. Nationwide Fund6
Performance |
| Timeline |
| Sterling Capital Short |
| Nationwide Fund6 |
Sterling Capital and Nationwide Fund6 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Nationwide Fund6
The main advantage of trading using opposite Sterling Capital and Nationwide Fund6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Nationwide Fund6 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 Nationwide Fund6 will offset losses from the drop in Nationwide Fund6's long position.| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital South | Sterling Capital vs. Sterling Capital South |
| Nationwide Fund6 vs. Nationwide Mid Cap | Nationwide Fund6 vs. Nationwide Small Cap | Nationwide Fund6 vs. Nationwide International Index | Nationwide Fund6 vs. Nationwide Fund Institutional |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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