Correlation Between Citizens and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Citizens 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 Citizens and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens and Sterling Capital Behavioral, you can compare the effects of market volatilities on Citizens 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 Citizens with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens and Sterling Capital.
Diversification Opportunities for Citizens and Sterling Capital
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citizens and Sterling is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Citizens and Sterling Capital Behavioral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Beh and Citizens 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 Citizens 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 Beh has no effect on the direction of Citizens i.e., Citizens and Sterling Capital go up and down completely randomly.
Pair Corralation between Citizens and Sterling Capital
Considering the 90-day investment horizon Citizens is expected to generate 4.25 times more return on investment than Sterling Capital. However, Citizens is 4.25 times more volatile than Sterling Capital Behavioral. It trades about 0.08 of its potential returns per unit of risk. Sterling Capital Behavioral is currently generating about -0.1 per unit of risk. If you would invest 306.00 in Citizens on December 10, 2024 and sell it today you would earn a total of 115.00 from holding Citizens or generate 37.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.42% |
| Values | Daily Returns |
Citizens vs. Sterling Capital Behavioral
Performance |
| Timeline |
| Citizens |
| Sterling Capital Beh |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Citizens and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens and Sterling Capital
The main advantage of trading using opposite Citizens and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens 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.| Citizens vs. CNO Financial Group | ||
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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