Correlation Between Fundamental Large and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Fundamental Large 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 Fundamental Large and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fundamental Large Cap and Sterling Capital Mid, you can compare the effects of market volatilities on Fundamental Large 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 Fundamental Large with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundamental Large and Sterling Capital.
Diversification Opportunities for Fundamental Large and Sterling Capital
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FUNDAMENTAL and STERLING is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Large Cap and Sterling Capital Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Mid and Fundamental Large 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 Fundamental Large Cap 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 Mid has no effect on the direction of Fundamental Large i.e., Fundamental Large and Sterling Capital go up and down completely randomly.
Pair Corralation between Fundamental Large and Sterling Capital
Assuming the 90 days horizon Fundamental Large is expected to generate 1.02 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, Fundamental Large Cap is 1.4 times less risky than Sterling Capital. It trades about 0.37 of its potential returns per unit of risk. Sterling Capital Mid is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,580 in Sterling Capital Mid on September 4, 2024 and sell it today you would earn a total of 97.00 from holding Sterling Capital Mid or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fundamental Large Cap vs. Sterling Capital Mid
Performance |
| Timeline |
| Fundamental Large Cap |
| Sterling Capital Mid |
Fundamental Large and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fundamental Large and Sterling Capital
The main advantage of trading using opposite Fundamental Large and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundamental Large 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.| Fundamental Large vs. Regional Bank Fund | Fundamental Large vs. Regional Bank Fund | Fundamental Large vs. Multimanager Lifestyle Moderate | Fundamental Large vs. Multimanager Lifestyle Balanced |
| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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