Correlation Between Capital World and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Capital World 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 Capital World and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital World Growth and Sterling Capital Short, you can compare the effects of market volatilities on Capital World 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 Capital World with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Sterling Capital.
Diversification Opportunities for Capital World and Sterling Capital
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capital and Sterling is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Growth and Sterling Capital Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Short and Capital World 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 Capital World Growth 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 Short has no effect on the direction of Capital World i.e., Capital World and Sterling Capital go up and down completely randomly.
Pair Corralation between Capital World and Sterling Capital
Assuming the 90 days horizon Capital World Growth is expected to generate 5.11 times more return on investment than Sterling Capital. However, Capital World is 5.11 times more volatile than Sterling Capital Short. It trades about 0.06 of its potential returns per unit of risk. Sterling Capital Short is currently generating about 0.19 per unit of risk. If you would invest 6,530 in Capital World Growth on November 28, 2024 and sell it today you would earn a total of 46.00 from holding Capital World Growth or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital World Growth vs. Sterling Capital Short
Performance |
| Timeline |
| Capital World Growth |
| Sterling Capital Short |
Capital World and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and Sterling Capital
The main advantage of trading using opposite Capital World and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World 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.| Capital World vs. Pimco Emerging Markets | Capital World vs. Hartford Schroders Emerging | Capital World vs. Doubleline Emerging Markets | Capital World vs. Dws Emerging Markets |
| Sterling Capital vs. Hartford Moderate Allocation | Sterling Capital vs. American Funds Retirement | Sterling Capital vs. Wealthbuilder Moderate Balanced | Sterling Capital vs. Voya Retirement Growth |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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