Correlation Between Barings Active and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Barings Active and Sterling Capital 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 Barings Active and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Active Short and Sterling Capital Short, you can compare the effects of market volatilities on Barings Active and Sterling Capital 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 Barings Active with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Sterling Capital.
Diversification Opportunities for Barings Active and Sterling Capital
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Sterling is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Sterling Capital Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Short and Barings Active 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 Barings Active Short are associated (or correlated) with Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Short has no effect on the direction of Barings Active i.e., Barings Active and Sterling Capital go up and down completely randomly.
Pair Corralation between Barings Active and Sterling Capital
Assuming the 90 days horizon Barings Active Short is expected to generate 1.04 times more return on investment than Sterling Capital. However, Barings Active is 1.04 times more volatile than Sterling Capital Short. It trades about 0.25 of its potential returns per unit of risk. Sterling Capital Short is currently generating about 0.18 per unit of risk. If you would invest 836.00 in Barings Active Short on September 1, 2024 and sell it today you would earn a total of 85.00 from holding Barings Active Short or generate 10.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Barings Active Short vs. Sterling Capital Short
Performance |
| Timeline |
| Barings Active Short |
| Sterling Capital Short |
Barings Active and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Sterling Capital
The main advantage of trading using opposite Barings Active and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Barings Active vs. Barings Active Short | Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Global Floating |
| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital South | Sterling Capital vs. Sterling Capital South |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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