Correlation Between Sterling Capital and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Federated Hermes 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 Federated Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital Mid and Federated Hermes Conservative, you can compare the effects of market volatilities on Sterling Capital and Federated Hermes 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 Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Federated Hermes.
Diversification Opportunities for Sterling Capital and Federated Hermes
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sterling and Federated is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Mid and Federated Hermes Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Con 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 Mid are associated (or correlated) with Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes Con has no effect on the direction of Sterling Capital i.e., Sterling Capital and Federated Hermes go up and down completely randomly.
Pair Corralation between Sterling Capital and Federated Hermes
Assuming the 90 days horizon Sterling Capital is expected to generate 1.97 times less return on investment than Federated Hermes. In addition to that, Sterling Capital is 10.97 times more volatile than Federated Hermes Conservative. It trades about 0.01 of its total potential returns per unit of risk. Federated Hermes Conservative is currently generating about 0.22 per unit of volatility. If you would invest 944.00 in Federated Hermes Conservative on September 14, 2024 and sell it today you would earn a total of 57.00 from holding Federated Hermes Conservative or generate 6.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Mid vs. Federated Hermes Conservative
Performance |
| Timeline |
| Sterling Capital Mid |
| Federated Hermes Con |
Sterling Capital and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Federated Hermes
The main advantage of trading using opposite Sterling Capital and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Federated Hermes 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 Federated Hermes will offset losses from the drop in Federated Hermes' long position.| Sterling Capital vs. Federated Hermes Conservative | Sterling Capital vs. Global Diversified Income | Sterling Capital vs. Calvert Conservative Allocation | Sterling Capital vs. Prudential Core Conservative |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |