Correlation Between Sterling Capital and American Funds
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and American Funds 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 Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital Virginia and American Funds Conservative, you can compare the effects of market volatilities on Sterling Capital and American Funds 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 Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and American Funds.
Diversification Opportunities for Sterling Capital and American Funds
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sterling and American is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Virginia and American Funds Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Conse 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 Virginia are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Conse has no effect on the direction of Sterling Capital i.e., Sterling Capital and American Funds go up and down completely randomly.
Pair Corralation between Sterling Capital and American Funds
Assuming the 90 days horizon Sterling Capital is expected to generate 2.47 times less return on investment than American Funds. But when comparing it to its historical volatility, Sterling Capital Virginia is 1.54 times less risky than American Funds. It trades about 0.19 of its potential returns per unit of risk. American Funds Conservative is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,349 in American Funds Conservative on September 4, 2024 and sell it today you would earn a total of 26.00 from holding American Funds Conservative or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Sterling Capital Virginia vs. American Funds Conservative
Performance |
| Timeline |
| Sterling Capital Virginia |
| American Funds Conse |
Sterling Capital and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and American Funds
The main advantage of trading using opposite Sterling Capital and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, American Funds 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 Funds will offset losses from the drop in American Funds' long position.| Sterling Capital vs. T Rowe Price | Sterling Capital vs. Legg Mason Partners | Sterling Capital vs. T Rowe Price | Sterling Capital vs. T Rowe Price |
| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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