Correlation Between Mairs Power and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Mairs Power 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 Mairs Power and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mairs Power Growth and Sterling Capital Special, you can compare the effects of market volatilities on Mairs Power 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 Mairs Power with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mairs Power and Sterling Capital.
Diversification Opportunities for Mairs Power and Sterling Capital
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mairs and Sterling is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Mairs Power Growth and Sterling Capital Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Special and Mairs Power 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 Mairs Power Growth 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 Special has no effect on the direction of Mairs Power i.e., Mairs Power and Sterling Capital go up and down completely randomly.
Pair Corralation between Mairs Power and Sterling Capital
Assuming the 90 days horizon Mairs Power Growth is expected to generate 0.37 times more return on investment than Sterling Capital. However, Mairs Power Growth is 2.71 times less risky than Sterling Capital. It trades about -0.29 of its potential returns per unit of risk. Sterling Capital Special is currently generating about -0.25 per unit of risk. If you would invest 18,290 in Mairs Power Growth on October 9, 2024 and sell it today you would lose (1,140) from holding Mairs Power Growth or give up 6.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mairs Power Growth vs. Sterling Capital Special
Performance |
| Timeline |
| Mairs Power Growth |
| Sterling Capital Special |
Mairs Power and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mairs Power and Sterling Capital
The main advantage of trading using opposite Mairs Power and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mairs Power 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.| Mairs Power vs. Meridian Trarian Fund | Mairs Power vs. Mairs Power Balanced | Mairs Power vs. Clipper Fund Inc | Mairs Power vs. Meridian Growth Fund |
| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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