Correlation Between HCM Defender and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both HCM Defender 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 HCM Defender and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCM Defender 100 and Sterling Capital Focus, you can compare the effects of market volatilities on HCM Defender 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 HCM Defender with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCM Defender and Sterling Capital.
Diversification Opportunities for HCM Defender and Sterling Capital
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HCM and Sterling is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding HCM Defender 100 and Sterling Capital Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Focus and HCM Defender 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 HCM Defender 100 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 Focus has no effect on the direction of HCM Defender i.e., HCM Defender and Sterling Capital go up and down completely randomly.
Pair Corralation between HCM Defender and Sterling Capital
Considering the 90-day investment horizon HCM Defender 100 is expected to generate 0.96 times more return on investment than Sterling Capital. However, HCM Defender 100 is 1.04 times less risky than Sterling Capital. It trades about 0.1 of its potential returns per unit of risk. Sterling Capital Focus is currently generating about 0.07 per unit of risk. If you would invest 3,525 in HCM Defender 100 on August 30, 2024 and sell it today you would earn a total of 3,026 from holding HCM Defender 100 or generate 85.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCM Defender 100 vs. Sterling Capital Focus
Performance |
| Timeline |
| HCM Defender 100 |
| Sterling Capital Focus |
HCM Defender and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCM Defender and Sterling Capital
The main advantage of trading using opposite HCM Defender and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCM Defender 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.| HCM Defender vs. iShares MSCI USA | HCM Defender vs. iShares MSCI USA | HCM Defender vs. iShares MSCI USA | HCM Defender vs. iShares Expanded Tech Software |
| Sterling Capital vs. iShares MSCI USA | Sterling Capital vs. iShares MSCI USA | Sterling Capital vs. iShares MSCI USA | Sterling Capital vs. iShares Expanded Tech Software |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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