Correlation Between Sterling Capital and American Beacon
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and American Beacon 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 American Beacon 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 American Beacon Stephens, you can compare the effects of market volatilities on Sterling Capital and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and American Beacon.
Diversification Opportunities for Sterling Capital and American Beacon
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sterling and American is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Stephens has no effect on the direction of Sterling Capital i.e., Sterling Capital and American Beacon go up and down completely randomly.
Pair Corralation between Sterling Capital and American Beacon
Assuming the 90 days horizon Sterling Capital Short is expected to generate 0.12 times more return on investment than American Beacon. However, Sterling Capital Short is 8.15 times less risky than American Beacon. It trades about 0.23 of its potential returns per unit of risk. American Beacon Stephens is currently generating about -0.32 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 5.00 from holding Sterling Capital Short or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sterling Capital Short vs. American Beacon Stephens
Performance |
| Timeline |
| Sterling Capital Short |
| American Beacon Stephens |
Sterling Capital and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and American Beacon
The main advantage of trading using opposite Sterling Capital and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon'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 |
| American Beacon vs. Amer Beacon Ark | American Beacon vs. Amer Beacon Ark | American Beacon vs. American Beacon Large | American Beacon vs. American Beacon Ark |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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