Correlation Between T Rowe and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both T Rowe 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 T Rowe and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Rowe Price and Sterling Capital Special, you can compare the effects of market volatilities on T Rowe 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 T Rowe with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Sterling Capital.
Diversification Opportunities for T Rowe and Sterling Capital
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RRTLX and Sterling is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price 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 T Rowe 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 T Rowe Price 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 T Rowe i.e., T Rowe and Sterling Capital go up and down completely randomly.
Pair Corralation between T Rowe and Sterling Capital
Assuming the 90 days horizon T Rowe is expected to generate 2.97 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, T Rowe Price is 2.62 times less risky than Sterling Capital. It trades about 0.13 of its potential returns per unit of risk. Sterling Capital Special is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,800 in Sterling Capital Special on September 1, 2024 and sell it today you would earn a total of 485.00 from holding Sterling Capital Special or generate 17.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
T Rowe Price vs. Sterling Capital Special
Performance |
| Timeline |
| T Rowe Price |
| Sterling Capital Special |
T Rowe and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rowe and Sterling Capital
The main advantage of trading using opposite T Rowe and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe 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.The idea behind T Rowe Price and Sterling Capital Special pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sterling Capital vs. Angel Oak Financial | Sterling Capital vs. Blackrock Financial Institutions | Sterling Capital vs. Mesirow Financial Small | Sterling Capital vs. Transamerica Financial Life |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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