Correlation Between Sterling Capital and Western Assets
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Western Assets 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 Western Assets 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 Western Assets Emerging, you can compare the effects of market volatilities on Sterling Capital and Western Assets 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 Western Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Western Assets.
Diversification Opportunities for Sterling Capital and Western Assets
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sterling and Western is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Mid and Western Assets Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Assets Emerging 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 Western Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Assets Emerging has no effect on the direction of Sterling Capital i.e., Sterling Capital and Western Assets go up and down completely randomly.
Pair Corralation between Sterling Capital and Western Assets
Assuming the 90 days horizon Sterling Capital Mid is expected to generate 2.55 times more return on investment than Western Assets. However, Sterling Capital is 2.55 times more volatile than Western Assets Emerging. It trades about 0.18 of its potential returns per unit of risk. Western Assets Emerging is currently generating about 0.27 per unit of risk. If you would invest 1,077 in Sterling Capital Mid on October 26, 2024 and sell it today you would earn a total of 27.00 from holding Sterling Capital Mid or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Sterling Capital Mid vs. Western Assets Emerging
Performance |
| Timeline |
| Sterling Capital Mid |
| Western Assets Emerging |
Sterling Capital and Western Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Western Assets
The main advantage of trading using opposite Sterling Capital and Western Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Western Assets 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 Western Assets will offset losses from the drop in Western Assets' long position.| Sterling Capital vs. Western Assets Emerging | Sterling Capital vs. Ashmore Emerging Markets | Sterling Capital vs. Growth Strategy Fund | Sterling Capital vs. Angel Oak Multi Strategy |
| Western Assets vs. Nuveen Mid Cap | Western Assets vs. Qs Small Capitalization | Western Assets vs. Arrow Dwa Balanced | Western Assets vs. Credit Suisse Floating |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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