Correlation Between Power REIT and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Power REIT 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 Power REIT and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power REIT and Sterling Capital Stratton, you can compare the effects of market volatilities on Power REIT 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 Power REIT with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power REIT and Sterling Capital.
Diversification Opportunities for Power REIT and Sterling Capital
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Power and STERLING is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Power REIT and Sterling Capital Stratton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Stratton and Power REIT 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 Power REIT 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 Stratton has no effect on the direction of Power REIT i.e., Power REIT and Sterling Capital go up and down completely randomly.
Pair Corralation between Power REIT and Sterling Capital
Allowing for the 90-day total investment horizon Power REIT is expected to generate 1.7 times less return on investment than Sterling Capital. In addition to that, Power REIT is 5.03 times more volatile than Sterling Capital Stratton. It trades about 0.02 of its total potential returns per unit of risk. Sterling Capital Stratton is currently generating about 0.19 per unit of volatility. If you would invest 3,926 in Sterling Capital Stratton on August 30, 2024 and sell it today you would earn a total of 150.00 from holding Sterling Capital Stratton or generate 3.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power REIT vs. Sterling Capital Stratton
Performance |
| Timeline |
| Power REIT |
| Sterling Capital Stratton |
Power REIT and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power REIT and Sterling Capital
The main advantage of trading using opposite Power REIT and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power REIT 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.| Power REIT vs. Newlake Capital Partners | Power REIT vs. Outfront Media | Power REIT vs. Uniti Group | Power REIT vs. Farmland Partners |
| Sterling Capital vs. Franklin Natural Resources | Sterling Capital vs. HUMANA INC | Sterling Capital vs. Aquagold International | Sterling Capital vs. Barloworld Ltd ADR |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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