Correlation Between SPACE and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both SPACE 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 SPACE and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPACE and Sterling Capital Short, you can compare the effects of market volatilities on SPACE 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 SPACE with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPACE and Sterling Capital.
Diversification Opportunities for SPACE and Sterling Capital
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between SPACE and STERLING is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and Sterling Capital Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Short and SPACE 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 SPACE 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 Short has no effect on the direction of SPACE i.e., SPACE and Sterling Capital go up and down completely randomly.
Pair Corralation between SPACE and Sterling Capital
Assuming the 90 days horizon SPACE is expected to generate 42.58 times more return on investment than Sterling Capital. However, SPACE is 42.58 times more volatile than Sterling Capital Short. It trades about 0.27 of its potential returns per unit of risk. Sterling Capital Short is currently generating about -0.05 per unit of risk. If you would invest 36.00 in SPACE on September 3, 2024 and sell it today you would earn a total of 23.00 from holding SPACE or generate 63.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
SPACE vs. Sterling Capital Short
Performance |
| Timeline |
| SPACE |
| Sterling Capital Short |
SPACE and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPACE and Sterling Capital
The main advantage of trading using opposite SPACE and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE 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.The idea behind SPACE and Sterling Capital Short pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sterling Capital vs. SPACE | Sterling Capital vs. Bayview Acquisition Corp | Sterling Capital vs. Ampleforth | Sterling Capital vs. ionet |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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