Correlation Between Fabxx and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Fabxx 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 Fabxx and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabxx and Sterling Capital Stratton, you can compare the effects of market volatilities on Fabxx 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 Fabxx with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabxx and Sterling Capital.
Diversification Opportunities for Fabxx and Sterling Capital
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fabxx and Sterling is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Fabxx 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 Fabxx 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 Fabxx 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 Fabxx i.e., Fabxx and Sterling Capital go up and down completely randomly.
Pair Corralation between Fabxx and Sterling Capital
Assuming the 90 days horizon Fabxx is expected to under-perform the Sterling Capital. In addition to that, Fabxx is 9.03 times more volatile than Sterling Capital Stratton. It trades about -0.16 of its total potential returns per unit of risk. Sterling Capital Stratton is currently generating about -0.04 per unit of volatility. If you would invest 3,980 in Sterling Capital Stratton on September 12, 2024 and sell it today you would lose (89.00) from holding Sterling Capital Stratton or give up 2.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Fabxx vs. Sterling Capital Stratton
Performance |
| Timeline |
| Fabxx |
| Sterling Capital Stratton |
Fabxx and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fabxx and Sterling Capital
The main advantage of trading using opposite Fabxx and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabxx 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.| Fabxx vs. Vanguard Total Stock | Fabxx vs. Vanguard 500 Index | Fabxx vs. Vanguard Total Stock | Fabxx vs. Vanguard Total Stock |
| Sterling Capital vs. Ab Impact Municipal | Sterling Capital vs. Dws Government Money | Sterling Capital vs. Nuveen Minnesota Municipal | Sterling Capital vs. Franklin High Yield |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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