Correlation Between Microsoft and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Sterling Capital North, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Sterling Capital.
Diversification Opportunities for Microsoft and Sterling Capital
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Sterling is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Sterling Capital North in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital North and Microsoft 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 Microsoft 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 North has no effect on the direction of Microsoft i.e., Microsoft and Sterling Capital go up and down completely randomly.
Pair Corralation between Microsoft and Sterling Capital
Given the investment horizon of 90 days Microsoft is expected to under-perform the Sterling Capital. In addition to that, Microsoft is 8.02 times more volatile than Sterling Capital North. It trades about -0.06 of its total potential returns per unit of risk. Sterling Capital North is currently generating about 0.07 per unit of volatility. If you would invest 1,005 in Sterling Capital North on August 26, 2024 and sell it today you would earn a total of 3.00 from holding Sterling Capital North or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Sterling Capital North
Performance |
| Timeline |
| Microsoft |
| Sterling Capital North |
Microsoft and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Sterling Capital
The main advantage of trading using opposite Microsoft and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Rapid7 Inc |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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