Correlation Between Federated Pennsylvania and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Federated Pennsylvania 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 Federated Pennsylvania and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Pennsylvania Municipal and Sterling Capital Behavioral, you can compare the effects of market volatilities on Federated Pennsylvania 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 Federated Pennsylvania with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Pennsylvania and Sterling Capital.
Diversification Opportunities for Federated Pennsylvania and Sterling Capital
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FEDERATED and Sterling is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Federated Pennsylvania Municip 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 Federated Pennsylvania 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 Federated Pennsylvania Municipal 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 Federated Pennsylvania i.e., Federated Pennsylvania and Sterling Capital go up and down completely randomly.
Pair Corralation between Federated Pennsylvania and Sterling Capital
Assuming the 90 days horizon Federated Pennsylvania is expected to generate 4.54 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, Federated Pennsylvania Municipal is 4.11 times less risky than Sterling Capital. It trades about 0.13 of its potential returns per unit of risk. Sterling Capital Behavioral is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,644 in Sterling Capital Behavioral on September 5, 2024 and sell it today you would earn a total of 391.00 from holding Sterling Capital Behavioral or generate 14.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Pennsylvania Municip vs. Sterling Capital Behavioral
Performance |
| Timeline |
| Federated Pennsylvania |
| Sterling Capital Beh |
Federated Pennsylvania and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Pennsylvania and Sterling Capital
The main advantage of trading using opposite Federated Pennsylvania and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Pennsylvania 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.| Federated Pennsylvania vs. Federated Emerging Market | Federated Pennsylvania vs. Federated Mdt All | Federated Pennsylvania vs. Federated Mdt Balanced | Federated Pennsylvania vs. Federated Global Allocation |
| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital South |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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