Correlation Between Gmo High and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Gmo 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 Gmo 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 Gmo High Yield and Sterling Capital Intermediate, you can compare the effects of market volatilities on Gmo 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 Gmo High with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Sterling Capital.
Diversification Opportunities for Gmo High and Sterling Capital
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gmo and Sterling is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Sterling Capital Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Int and Gmo 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 Gmo 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 Int has no effect on the direction of Gmo High i.e., Gmo High and Sterling Capital go up and down completely randomly.
Pair Corralation between Gmo High and Sterling Capital
Assuming the 90 days horizon Gmo High Yield is expected to generate 0.79 times more return on investment than Sterling Capital. However, Gmo High Yield is 1.26 times less risky than Sterling Capital. It trades about 0.3 of its potential returns per unit of risk. Sterling Capital Intermediate is currently generating about 0.05 per unit of risk. If you would invest 1,657 in Gmo High Yield on October 20, 2024 and sell it today you would earn a total of 21.00 from holding Gmo High Yield or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Gmo High Yield vs. Sterling Capital Intermediate
Performance |
| Timeline |
| Gmo High Yield |
| Sterling Capital Int |
Gmo High and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Sterling Capital
The main advantage of trading using opposite Gmo High and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo 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.| Gmo High vs. Cref Money Market | Gmo High vs. Dws Government Money | Gmo High vs. Ubs Money Series | Gmo High vs. Blackrock Exchange Portfolio |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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