Correlation Between Sterling Capital and Alger 35
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Alger 35 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 Sterling Capital and Alger 35 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital Focus and Alger 35 ETF, you can compare the effects of market volatilities on Sterling Capital and Alger 35 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 Sterling Capital with a short position of Alger 35. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Alger 35.
Diversification Opportunities for Sterling Capital and Alger 35
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sterling and Alger is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Focus and Alger 35 ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger 35 ETF and Sterling Capital 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 Sterling Capital Focus are associated (or correlated) with Alger 35. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger 35 ETF has no effect on the direction of Sterling Capital i.e., Sterling Capital and Alger 35 go up and down completely randomly.
Pair Corralation between Sterling Capital and Alger 35
Considering the 90-day investment horizon Sterling Capital is expected to generate 1.74 times less return on investment than Alger 35. But when comparing it to its historical volatility, Sterling Capital Focus is 1.14 times less risky than Alger 35. It trades about 0.06 of its potential returns per unit of risk. Alger 35 ETF is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,437 in Alger 35 ETF on November 2, 2024 and sell it today you would earn a total of 1,228 from holding Alger 35 ETF or generate 85.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Focus vs. Alger 35 ETF
Performance |
| Timeline |
| Sterling Capital Focus |
| Alger 35 ETF |
Sterling Capital and Alger 35 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Alger 35
The main advantage of trading using opposite Sterling Capital and Alger 35 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Alger 35 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 Alger 35 will offset losses from the drop in Alger 35's long position.| Sterling Capital vs. Absolute Core Strategy | Sterling Capital vs. iShares ESG Advanced | Sterling Capital vs. PIMCO RAFI Dynamic | Sterling Capital vs. HCM Defender 100 |
| Alger 35 vs. Sterling Capital Focus | Alger 35 vs. Northern Lights | Alger 35 vs. AdvisorShares Dorsey Wright | Alger 35 vs. 6 Meridian Quality |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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