Correlation Between Prudential Short and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Prudential Short 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 Prudential Short and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Short Duration and Sterling Capital Stratton, you can compare the effects of market volatilities on Prudential Short 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 Prudential Short with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Short and Sterling Capital.
Diversification Opportunities for Prudential Short and Sterling Capital
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prudential and Sterling is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Short Duration 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 Prudential Short 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 Prudential Short Duration 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 Prudential Short i.e., Prudential Short and Sterling Capital go up and down completely randomly.
Pair Corralation between Prudential Short and Sterling Capital
Assuming the 90 days horizon Prudential Short Duration is expected to under-perform the Sterling Capital. But the mutual fund apears to be less risky and, when comparing its historical volatility, Prudential Short Duration is 14.72 times less risky than Sterling Capital. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Sterling Capital Stratton is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 4,848 in Sterling Capital Stratton on September 1, 2024 and sell it today you would earn a total of 412.00 from holding Sterling Capital Stratton or generate 8.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Prudential Short Duration vs. Sterling Capital Stratton
Performance |
| Timeline |
| Prudential Short Duration |
| Sterling Capital Stratton |
Prudential Short and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Short and Sterling Capital
The main advantage of trading using opposite Prudential Short and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Short 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.| Prudential Short vs. Fidelity Advisor Financial | Prudential Short vs. Prudential Jennison Financial | Prudential Short vs. Mesirow Financial Small | Prudential Short vs. Mesirow Financial Small |
| Sterling Capital vs. Mesirow Financial High | Sterling Capital vs. Prudential Short Duration | Sterling Capital vs. Fidelity Capital Income | Sterling Capital vs. Msift 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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