Correlation Between Red Oak and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Red Oak 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 Red Oak and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Oak Technology and Sterling Capital Special, you can compare the effects of market volatilities on Red Oak 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 Red Oak with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Oak and Sterling Capital.
Diversification Opportunities for Red Oak and Sterling Capital
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Red and Sterling is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Red Oak Technology 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 Red Oak 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 Red Oak Technology 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 Red Oak i.e., Red Oak and Sterling Capital go up and down completely randomly.
Pair Corralation between Red Oak and Sterling Capital
Assuming the 90 days horizon Red Oak Technology is expected to generate 1.04 times more return on investment than Sterling Capital. However, Red Oak is 1.04 times more volatile than Sterling Capital Special. It trades about 0.09 of its potential returns per unit of risk. Sterling Capital Special is currently generating about 0.03 per unit of risk. If you would invest 3,527 in Red Oak Technology on September 12, 2024 and sell it today you would earn a total of 1,421 from holding Red Oak Technology or generate 40.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Oak Technology vs. Sterling Capital Special
Performance |
| Timeline |
| Red Oak Technology |
| Sterling Capital Special |
Red Oak and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Oak and Sterling Capital
The main advantage of trading using opposite Red Oak and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Oak 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.| Red Oak vs. Vanguard Information Technology | Red Oak vs. Technology Portfolio Technology | Red Oak vs. Fidelity Select Semiconductors | Red Oak vs. Software And It |
| Sterling Capital vs. Technology Ultrasector Profund | Sterling Capital vs. Pgim Jennison Technology | Sterling Capital vs. Red Oak Technology | Sterling Capital vs. Blackrock Science Technology |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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