Correlation Between Sterling Capital and Pace Municipal
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Pace Municipal 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 Pace Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital Ultra and Pace Municipal Fixed, you can compare the effects of market volatilities on Sterling Capital and Pace Municipal 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 Pace Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Pace Municipal.
Diversification Opportunities for Sterling Capital and Pace Municipal
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sterling and Pace is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Ultra and Pace Municipal Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Municipal Fixed 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 Ultra are associated (or correlated) with Pace Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Municipal Fixed has no effect on the direction of Sterling Capital i.e., Sterling Capital and Pace Municipal go up and down completely randomly.
Pair Corralation between Sterling Capital and Pace Municipal
Assuming the 90 days horizon Sterling Capital Ultra is expected to generate 0.48 times more return on investment than Pace Municipal. However, Sterling Capital Ultra is 2.09 times less risky than Pace Municipal. It trades about 0.25 of its potential returns per unit of risk. Pace Municipal Fixed is currently generating about 0.07 per unit of risk. If you would invest 884.00 in Sterling Capital Ultra on September 3, 2024 and sell it today you would earn a total of 98.00 from holding Sterling Capital Ultra or generate 11.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Ultra vs. Pace Municipal Fixed
Performance |
| Timeline |
| Sterling Capital Ultra |
| Pace Municipal Fixed |
Sterling Capital and Pace Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Pace Municipal
The main advantage of trading using opposite Sterling Capital and Pace Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Pace Municipal 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 Pace Municipal will offset losses from the drop in Pace Municipal's long position.| Sterling Capital vs. Goldman Sachs High | Sterling Capital vs. Pioneer High Yield | Sterling Capital vs. Pace High Yield | Sterling Capital vs. Msift High Yield |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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