Correlation Between Small Pany and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Small Pany 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 Small Pany and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Pany Growth and Sterling Capital Behavioral, you can compare the effects of market volatilities on Small Pany 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 Small Pany with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Pany and Sterling Capital.
Diversification Opportunities for Small Pany and Sterling Capital
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Small and Sterling is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth and Sterling Capital Behavioral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Beh and Small Pany 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 Small Pany 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 Beh has no effect on the direction of Small Pany i.e., Small Pany and Sterling Capital go up and down completely randomly.
Pair Corralation between Small Pany and Sterling Capital
Assuming the 90 days horizon Small Pany Growth is expected to generate 2.4 times more return on investment than Sterling Capital. However, Small Pany is 2.4 times more volatile than Sterling Capital Behavioral. It trades about 0.37 of its potential returns per unit of risk. Sterling Capital Behavioral is currently generating about 0.03 per unit of risk. If you would invest 1,274 in Small Pany Growth on September 13, 2024 and sell it today you would earn a total of 404.00 from holding Small Pany Growth or generate 31.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Small Pany Growth vs. Sterling Capital Behavioral
Performance |
| Timeline |
| Small Pany Growth |
| Sterling Capital Beh |
Small Pany and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Pany and Sterling Capital
The main advantage of trading using opposite Small Pany and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Pany 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.| Small Pany vs. Mid Cap Growth | Small Pany vs. Growth Portfolio Class | Small Pany vs. Morgan Stanley Multi | Small Pany vs. Emerging Markets Portfolio |
| 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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