Correlation Between Ab Global and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Ab Global 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 Ab Global and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global Risk and Sterling Capital Stratton, you can compare the effects of market volatilities on Ab Global 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 Ab Global with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Sterling Capital.
Diversification Opportunities for Ab Global and Sterling Capital
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CABIX and Sterling is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Risk and Sterling Capital Stratton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Stratton and Ab Global 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 Ab Global Risk 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 Stratton has no effect on the direction of Ab Global i.e., Ab Global and Sterling Capital go up and down completely randomly.
Pair Corralation between Ab Global and Sterling Capital
Assuming the 90 days horizon Ab Global is expected to generate 13.22 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, Ab Global Risk is 3.5 times less risky than Sterling Capital. It trades about 0.05 of its potential returns per unit of risk. Sterling Capital Stratton is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,947 in Sterling Capital Stratton on August 30, 2024 and sell it today you would earn a total of 304.00 from holding Sterling Capital Stratton or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Global Risk vs. Sterling Capital Stratton
Performance |
| Timeline |
| Ab Global Risk |
| Sterling Capital Stratton |
Ab Global and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Sterling Capital
The main advantage of trading using opposite Ab Global and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global 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.| Ab Global vs. All Asset Fund | Ab Global vs. HUMANA INC | Ab Global vs. Aquagold International | Ab Global vs. Barloworld Ltd ADR |
| Sterling Capital vs. Dodge Cox Emerging | Sterling Capital vs. T Rowe Price | Sterling Capital vs. Barings Emerging Markets | Sterling Capital vs. T Rowe Price |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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