Correlation Between Prudential Real and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Prudential Real 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 Prudential Real and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Real Estate and Sterling Capital Equity, you can compare the effects of market volatilities on Prudential Real 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 Prudential Real with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Real and Sterling Capital.
Diversification Opportunities for Prudential Real and Sterling Capital
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Prudential and Sterling is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Real Estate and Sterling Capital Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Equity and Prudential Real 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 Prudential Real Estate 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 Equity has no effect on the direction of Prudential Real i.e., Prudential Real and Sterling Capital go up and down completely randomly.
Pair Corralation between Prudential Real and Sterling Capital
Assuming the 90 days horizon Prudential Real is expected to generate 1.86 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, Prudential Real Estate is 1.16 times less risky than Sterling Capital. It trades about 0.17 of its potential returns per unit of risk. Sterling Capital Equity is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,825 in Sterling Capital Equity on September 4, 2024 and sell it today you would earn a total of 126.00 from holding Sterling Capital Equity or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Prudential Real Estate vs. Sterling Capital Equity
Performance |
| Timeline |
| Prudential Real Estate |
| Sterling Capital Equity |
Prudential Real and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Real and Sterling Capital
The main advantage of trading using opposite Prudential Real and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Real 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.| Prudential Real vs. Realty Income | Prudential Real vs. Dynex Capital | Prudential Real vs. First Industrial Realty | Prudential Real vs. Healthcare Realty Trust |
| Sterling Capital vs. Sterling Capital Special | Sterling Capital vs. Blackrock Hi Yld | Sterling Capital vs. Large Cap Fund | Sterling Capital vs. Sterling Capital Equity |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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