Correlation Between Balanced Strategy and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Balanced Strategy 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 Balanced Strategy and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Strategy Fund and Sterling Capital Special, you can compare the effects of market volatilities on Balanced Strategy 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 Balanced Strategy with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Strategy and Sterling Capital.
Diversification Opportunities for Balanced Strategy and Sterling Capital
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Balanced and Sterling is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Strategy Fund and Sterling Capital Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Special and Balanced Strategy 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 Balanced Strategy Fund 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 Special has no effect on the direction of Balanced Strategy i.e., Balanced Strategy and Sterling Capital go up and down completely randomly.
Pair Corralation between Balanced Strategy and Sterling Capital
Assuming the 90 days horizon Balanced Strategy is expected to generate 2.83 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, Balanced Strategy Fund is 1.89 times less risky than Sterling Capital. It trades about 0.11 of its potential returns per unit of risk. Sterling Capital Special is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,843 in Sterling Capital Special on October 25, 2024 and sell it today you would earn a total of 86.00 from holding Sterling Capital Special or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Strategy Fund vs. Sterling Capital Special
Performance |
| Timeline |
| Balanced Strategy |
| Sterling Capital Special |
Balanced Strategy and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Strategy and Sterling Capital
The main advantage of trading using opposite Balanced Strategy and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Strategy 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.| Balanced Strategy vs. Schwab Government Money | Balanced Strategy vs. Hsbc Treasury Money | Balanced Strategy vs. Vanguard Money Market | Balanced Strategy vs. Hewitt Money Market |
| Sterling Capital vs. Rbc Small Cap | Sterling Capital vs. Touchstone Small Cap | Sterling Capital vs. Smallcap Fund Fka | Sterling Capital vs. Artisan Small Cap |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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