Correlation Between Dana Large and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Dana Large 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 Dana Large and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dana Large Cap and Sterling Capital Behavioral, you can compare the effects of market volatilities on Dana Large 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 Dana Large with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana Large and Sterling Capital.
Diversification Opportunities for Dana Large and Sterling Capital
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dana and Sterling is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap 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 Dana Large 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 Dana Large Cap 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 Dana Large i.e., Dana Large and Sterling Capital go up and down completely randomly.
Pair Corralation between Dana Large and Sterling Capital
Assuming the 90 days horizon Dana Large is expected to generate 2.05 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, Dana Large Cap is 1.03 times less risky than Sterling Capital. It trades about 0.09 of its potential returns per unit of risk. Sterling Capital Behavioral is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,004 in Sterling Capital Behavioral on September 13, 2024 and sell it today you would earn a total of 21.00 from holding Sterling Capital Behavioral or generate 2.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Large Cap vs. Sterling Capital Behavioral
Performance |
| Timeline |
| Dana Large Cap |
| Sterling Capital Beh |
Dana Large and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana Large and Sterling Capital
The main advantage of trading using opposite Dana Large and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana Large 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.| Dana Large vs. Mid Cap Growth | Dana Large vs. Franklin Growth Opportunities | Dana Large vs. Needham Aggressive Growth | Dana Large vs. Tfa Alphagen Growth |
| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral | 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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