Correlation Between Sterling Capital and Stock Index
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Stock Index 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 Stock Index 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 Stock Index Fund, you can compare the effects of market volatilities on Sterling Capital and Stock Index 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 Stock Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Stock Index.
Diversification Opportunities for Sterling Capital and Stock Index
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sterling and Stock is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short and Stock Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stock Index Fund 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 Stock Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stock Index Fund has no effect on the direction of Sterling Capital i.e., Sterling Capital and Stock Index go up and down completely randomly.
Pair Corralation between Sterling Capital and Stock Index
Assuming the 90 days horizon Sterling Capital is expected to generate 4.26 times less return on investment than Stock Index. But when comparing it to its historical volatility, Sterling Capital Short is 5.58 times less risky than Stock Index. It trades about 0.17 of its potential returns per unit of risk. Stock Index Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,311 in Stock Index Fund on September 2, 2024 and sell it today you would earn a total of 1,787 from holding Stock Index Fund or generate 41.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Short vs. Stock Index Fund
Performance |
| Timeline |
| Sterling Capital Short |
| Stock Index Fund |
Sterling Capital and Stock Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Stock Index
The main advantage of trading using opposite Sterling Capital and Stock Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Stock Index 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 Stock Index will offset losses from the drop in Stock Index'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 |
| Stock Index vs. Mid Cap Index | Stock Index vs. Mid Cap Strategic | Stock Index vs. Valic Company I | Stock Index vs. Small Cap Special |
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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