Correlation Between Redwood Real and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Redwood Real 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 Redwood Real and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Redwood Real Estate and Sterling Capital Stratton, you can compare the effects of market volatilities on Redwood Real 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 Redwood Real with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redwood Real and Sterling Capital.
Diversification Opportunities for Redwood Real and Sterling Capital
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Redwood and Sterling is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Redwood Real Estate 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 Redwood Real 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 Redwood Real Estate 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 Redwood Real i.e., Redwood Real and Sterling Capital go up and down completely randomly.
Pair Corralation between Redwood Real and Sterling Capital
Assuming the 90 days horizon Redwood Real Estate is expected to generate 0.02 times more return on investment than Sterling Capital. However, Redwood Real Estate is 42.96 times less risky than Sterling Capital. It trades about 1.11 of its potential returns per unit of risk. Sterling Capital Stratton is currently generating about -0.15 per unit of risk. If you would invest 2,476 in Redwood Real Estate on November 27, 2024 and sell it today you would earn a total of 45.00 from holding Redwood Real Estate or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Redwood Real Estate vs. Sterling Capital Stratton
Performance |
| Timeline |
| Redwood Real Estate |
| Sterling Capital Stratton |
Redwood Real and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redwood Real and Sterling Capital
The main advantage of trading using opposite Redwood Real and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redwood Real 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.| Redwood Real vs. Vanguard Total Stock | Redwood Real vs. Vanguard 500 Index | Redwood Real vs. Vanguard Total Stock | Redwood Real vs. Vanguard Total Stock |
| Sterling Capital vs. Columbia Real Estate | Sterling Capital vs. Alpine Realty Income | Sterling Capital vs. Davis Real Estate | Sterling Capital vs. Sterling Capital Stratton |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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