Correlation Between Sterling Capital and Deutsche Global
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Deutsche Global 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 Deutsche Global 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 Deutsche Global Growth, you can compare the effects of market volatilities on Sterling Capital and Deutsche Global 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 Deutsche Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Deutsche Global.
Diversification Opportunities for Sterling Capital and Deutsche Global
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sterling and Deutsche is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Deutsche Global Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Global Growth 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 Deutsche Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Global Growth has no effect on the direction of Sterling Capital i.e., Sterling Capital and Deutsche Global go up and down completely randomly.
Pair Corralation between Sterling Capital and Deutsche Global
Assuming the 90 days horizon Sterling Capital is expected to generate 9.35 times less return on investment than Deutsche Global. But when comparing it to its historical volatility, Sterling Capital Short is 8.73 times less risky than Deutsche Global. It trades about 0.06 of its potential returns per unit of risk. Deutsche Global Growth is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,125 in Deutsche Global Growth on September 1, 2024 and sell it today you would earn a total of 46.00 from holding Deutsche Global Growth or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sterling Capital Short vs. Deutsche Global Growth
Performance |
| Timeline |
| Sterling Capital Short |
| Deutsche Global Growth |
Sterling Capital and Deutsche Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Deutsche Global
The main advantage of trading using opposite Sterling Capital and Deutsche Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Deutsche Global 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 Deutsche Global will offset losses from the drop in Deutsche Global'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 |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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