Correlation Between Gmo Global and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Gmo Global 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 Gmo Global and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Global Equity and Sterling Capital Special, you can compare the effects of market volatilities on Gmo Global 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 Gmo Global with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Global and Sterling Capital.
Diversification Opportunities for Gmo Global and Sterling Capital
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Gmo and Sterling is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity 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 Gmo Global 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 Gmo Global Equity 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 Gmo Global i.e., Gmo Global and Sterling Capital go up and down completely randomly.
Pair Corralation between Gmo Global and Sterling Capital
Assuming the 90 days horizon Gmo Global Equity is expected to generate 0.67 times more return on investment than Sterling Capital. However, Gmo Global Equity is 1.49 times less risky than Sterling Capital. It trades about 0.09 of its potential returns per unit of risk. Sterling Capital Special is currently generating about 0.05 per unit of risk. If you would invest 2,210 in Gmo Global Equity on September 5, 2024 and sell it today you would earn a total of 823.00 from holding Gmo Global Equity or generate 37.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Gmo Global Equity vs. Sterling Capital Special
Performance |
| Timeline |
| Gmo Global Equity |
| Sterling Capital Special |
Gmo Global and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Global and Sterling Capital
The main advantage of trading using opposite Gmo Global and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global 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.| Gmo Global vs. Fidelity Capital Income | Gmo Global vs. Siit High Yield | Gmo Global vs. Goldman Sachs High | Gmo Global vs. Alpine High Yield |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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