Correlation Between Cref Inflation and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Cref Inflation 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 Cref Inflation and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cref Inflation Linked Bond and Sterling Capital South, you can compare the effects of market volatilities on Cref Inflation 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 Cref Inflation with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Inflation and Sterling Capital.
Diversification Opportunities for Cref Inflation and Sterling Capital
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cref and Sterling is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cref Inflation Linked Bond and Sterling Capital South in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital South and Cref Inflation 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 Cref Inflation Linked Bond 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 South has no effect on the direction of Cref Inflation i.e., Cref Inflation and Sterling Capital go up and down completely randomly.
Pair Corralation between Cref Inflation and Sterling Capital
Assuming the 90 days trading horizon Cref Inflation Linked Bond is expected to generate 1.34 times more return on investment than Sterling Capital. However, Cref Inflation is 1.34 times more volatile than Sterling Capital South. It trades about 0.1 of its potential returns per unit of risk. Sterling Capital South is currently generating about 0.09 per unit of risk. If you would invest 7,923 in Cref Inflation Linked Bond on September 12, 2024 and sell it today you would earn a total of 640.00 from holding Cref Inflation Linked Bond or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cref Inflation Linked Bond vs. Sterling Capital South
Performance |
| Timeline |
| Cref Inflation Linked |
| Sterling Capital South |
Cref Inflation and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cref Inflation and Sterling Capital
The main advantage of trading using opposite Cref Inflation and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cref Inflation 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.| Cref Inflation vs. Queens Road Small | Cref Inflation vs. Boston Partners Small | Cref Inflation vs. Valic Company I | Cref Inflation vs. Fpa Queens Road |
| Sterling Capital vs. Matson Money Equity | Sterling Capital vs. John Hancock Money | Sterling Capital vs. Cref Money Market | Sterling Capital vs. Hewitt Money Market |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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