Correlation Between Dunham High and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Dunham High 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 Dunham High and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dunham High Yield and Sterling Capital Special, you can compare the effects of market volatilities on Dunham High 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 Dunham High with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dunham High and Sterling Capital.
Diversification Opportunities for Dunham High and Sterling Capital
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dunham and Sterling is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dunham High Yield and Sterling Capital Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Special and Dunham High 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 Dunham High Yield 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 Special has no effect on the direction of Dunham High i.e., Dunham High and Sterling Capital go up and down completely randomly.
Pair Corralation between Dunham High and Sterling Capital
Assuming the 90 days horizon Dunham High is expected to generate 3.73 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, Dunham High Yield is 7.18 times less risky than Sterling Capital. It trades about 0.37 of its potential returns per unit of risk. Sterling Capital Special is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,131 in Sterling Capital Special on August 30, 2024 and sell it today you would earn a total of 132.00 from holding Sterling Capital Special or generate 4.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dunham High Yield vs. Sterling Capital Special
Performance |
| Timeline |
| Dunham High Yield |
| Sterling Capital Special |
Dunham High and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dunham High and Sterling Capital
The main advantage of trading using opposite Dunham High and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dunham High 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.| Dunham High vs. Prudential High Yield | Dunham High vs. HUMANA INC | Dunham High vs. Aquagold International | Dunham High vs. Barloworld Ltd ADR |
| Sterling Capital vs. Dunham High Yield | Sterling Capital vs. Ppm High Yield | Sterling Capital vs. Prudential High Yield | Sterling Capital vs. Fidelity Capital Income |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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