Correlation Between Sterling Capital and Transamerica Emerging
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Transamerica Emerging 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 Transamerica Emerging 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 Transamerica Emerging Markets, you can compare the effects of market volatilities on Sterling Capital and Transamerica Emerging 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 Transamerica Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Transamerica Emerging.
Diversification Opportunities for Sterling Capital and Transamerica Emerging
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between STERLING and Transamerica is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Transamerica Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Emerging 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 Transamerica Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Emerging has no effect on the direction of Sterling Capital i.e., Sterling Capital and Transamerica Emerging go up and down completely randomly.
Pair Corralation between Sterling Capital and Transamerica Emerging
Assuming the 90 days horizon Sterling Capital Short is expected to generate 0.12 times more return on investment than Transamerica Emerging. However, Sterling Capital Short is 8.13 times less risky than Transamerica Emerging. It trades about 0.11 of its potential returns per unit of risk. Transamerica Emerging Markets is currently generating about -0.15 per unit of risk. If you would invest 833.00 in Sterling Capital Short on August 29, 2024 and sell it today you would earn a total of 2.00 from holding Sterling Capital Short or generate 0.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sterling Capital Short vs. Transamerica Emerging Markets
Performance |
| Timeline |
| Sterling Capital Short |
| Transamerica Emerging |
Sterling Capital and Transamerica Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Transamerica Emerging
The main advantage of trading using opposite Sterling Capital and Transamerica Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Transamerica Emerging 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 Transamerica Emerging will offset losses from the drop in Transamerica Emerging's long position.| Sterling Capital vs. Permanent Portfolio Class | Sterling Capital vs. HUMANA INC | Sterling Capital vs. Aquagold International | Sterling Capital vs. Barloworld Ltd ADR |
| Transamerica Emerging vs. Vanguard Emerging Markets | Transamerica Emerging vs. Vanguard Emerging Markets | Transamerica Emerging vs. HUMANA INC | Transamerica Emerging vs. Aquagold International |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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