Correlation Between International Investors and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both International Investors 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 International Investors and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Investors Gold and Sterling Capital Porate, you can compare the effects of market volatilities on International Investors 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 International Investors with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Investors and Sterling Capital.
Diversification Opportunities for International Investors and Sterling Capital
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and STERLING is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding International Investors Gold 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 International Investors 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 International Investors Gold 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 International Investors i.e., International Investors and Sterling Capital go up and down completely randomly.
Pair Corralation between International Investors and Sterling Capital
Assuming the 90 days horizon International Investors Gold is expected to under-perform the Sterling Capital. In addition to that, International Investors is 2.6 times more volatile than Sterling Capital Porate. It trades about -0.25 of its total potential returns per unit of risk. Sterling Capital Porate is currently generating about 0.11 per unit of volatility. If you would invest 694.00 in Sterling Capital Porate on August 30, 2024 and sell it today you would earn a total of 12.00 from holding Sterling Capital Porate or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Investors Gold vs. Sterling Capital Porate
Performance |
| Timeline |
| International Investors |
| Sterling Capital Porate |
International Investors and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Investors and Sterling Capital
The main advantage of trading using opposite International Investors and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Investors 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 International Investors Gold and Sterling Capital Porate 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.
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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