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 Behavioral, 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
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gmo and Sterling is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield 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 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 Beh 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 is expected to generate 1.84 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, Gmo High Yield is 2.6 times less risky than Sterling Capital. It trades about 0.17 of its potential returns per unit of risk. Sterling Capital Behavioral is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,226 in Sterling Capital Behavioral on September 12, 2024 and sell it today you would earn a total of 740.00 from holding Sterling Capital Behavioral or generate 33.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.7% |
| Values | Daily Returns |
Gmo High Yield vs. Sterling Capital Behavioral
Performance |
| Timeline |
| Gmo High Yield |
| Sterling Capital Beh |
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. Artisan High Income | Gmo High vs. Blackrock High Yield | Gmo High vs. Pax High Yield | Gmo High vs. Msift High Yield |
| Sterling Capital vs. Mid Cap Growth | Sterling Capital vs. Smallcap Growth Fund | Sterling Capital vs. Praxis Growth Index | Sterling Capital vs. Small Pany Growth |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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