Correlation Between Sterling Capital and Small Company
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Small Company 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 Small Company 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 Small Pany Value, you can compare the effects of market volatilities on Sterling Capital and Small Company 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 Small Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Small Company.
Diversification Opportunities for Sterling Capital and Small Company
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sterling and Small is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Small Pany Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Value 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 Small Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Value has no effect on the direction of Sterling Capital i.e., Sterling Capital and Small Company go up and down completely randomly.
Pair Corralation between Sterling Capital and Small Company
Assuming the 90 days horizon Sterling Capital is expected to generate 5.24 times less return on investment than Small Company. But when comparing it to its historical volatility, Sterling Capital Short is 10.38 times less risky than Small Company. It trades about 0.19 of its potential returns per unit of risk. Small Pany Value is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,111 in Small Pany Value on September 1, 2024 and sell it today you would earn a total of 503.00 from holding Small Pany Value or generate 16.17% 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. Small Pany Value
Performance |
| Timeline |
| Sterling Capital Short |
| Small Pany Value |
Sterling Capital and Small Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Small Company
The main advantage of trading using opposite Sterling Capital and Small Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Small Company 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 Small Company will offset losses from the drop in Small Company'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 |
| Small Company vs. Wells Fargo Advantage | Small Company vs. Wells Fargo Advantage | Small Company vs. Wells Fargo Advantage | Small Company vs. Wells Fargo Ultra |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |