Correlation Between Sterling Capital and First Trust
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and First Trust 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 First Trust 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 First Trust Exchange Traded, you can compare the effects of market volatilities on Sterling Capital and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and First Trust.
Diversification Opportunities for Sterling Capital and First Trust
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sterling and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Focus and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Exchange has no effect on the direction of Sterling Capital i.e., Sterling Capital and First Trust go up and down completely randomly.
Pair Corralation between Sterling Capital and First Trust
Considering the 90-day investment horizon Sterling Capital Focus is expected to generate 0.81 times more return on investment than First Trust. However, Sterling Capital Focus is 1.23 times less risky than First Trust. It trades about 0.31 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.19 per unit of risk. If you would invest 2,961 in Sterling Capital Focus on November 2, 2024 and sell it today you would earn a total of 207.00 from holding Sterling Capital Focus or generate 6.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Focus vs. First Trust Exchange Traded
Performance |
| Timeline |
| Sterling Capital Focus |
| First Trust Exchange |
Sterling Capital and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and First Trust
The main advantage of trading using opposite Sterling Capital and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust'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 |
| First Trust vs. American Century Quality | First Trust vs. T Rowe Price | First Trust vs. ClearBridge Large Cap | First Trust vs. Sterling Capital Focus |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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