Correlation Between Iaadx and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Iaadx 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 Iaadx and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iaadx and Sterling Capital Porate, you can compare the effects of market volatilities on Iaadx 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 Iaadx with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iaadx and Sterling Capital.
Diversification Opportunities for Iaadx and Sterling Capital
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Iaadx and Sterling is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Iaadx and Sterling Capital Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Porate and Iaadx 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 Iaadx 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 Porate has no effect on the direction of Iaadx i.e., Iaadx and Sterling Capital go up and down completely randomly.
Pair Corralation between Iaadx and Sterling Capital
Assuming the 90 days horizon Iaadx is expected to generate 0.4 times more return on investment than Sterling Capital. However, Iaadx is 2.52 times less risky than Sterling Capital. It trades about 0.11 of its potential returns per unit of risk. Sterling Capital Porate is currently generating about 0.01 per unit of risk. If you would invest 873.00 in Iaadx on September 14, 2024 and sell it today you would earn a total of 64.00 from holding Iaadx or generate 7.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Iaadx vs. Sterling Capital Porate
Performance |
| Timeline |
| Iaadx |
| Sterling Capital Porate |
Iaadx and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iaadx and Sterling Capital
The main advantage of trading using opposite Iaadx and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iaadx 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.| Iaadx vs. Transamerica Emerging Markets | Iaadx vs. Transamerica Emerging Markets | Iaadx vs. Transamerica Emerging Markets | Iaadx vs. Transamerica Capital Growth |
| Sterling Capital vs. Gabelli Global Financial | Sterling Capital vs. Goldman Sachs Financial | Sterling Capital vs. Angel Oak Financial | Sterling Capital vs. Royce Global Financial |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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