Correlation Between Moderately Aggressive and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Moderately Aggressive 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 Moderately Aggressive and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moderately Aggressive Balanced and Sterling Capital North, you can compare the effects of market volatilities on Moderately Aggressive 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 Moderately Aggressive with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moderately Aggressive and Sterling Capital.
Diversification Opportunities for Moderately Aggressive and Sterling Capital
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Moderately and Sterling is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Moderately Aggressive Balanced and Sterling Capital North in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital North and Moderately Aggressive 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 Moderately Aggressive Balanced 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 North has no effect on the direction of Moderately Aggressive i.e., Moderately Aggressive and Sterling Capital go up and down completely randomly.
Pair Corralation between Moderately Aggressive and Sterling Capital
Assuming the 90 days horizon Moderately Aggressive Balanced is expected to generate 3.77 times more return on investment than Sterling Capital. However, Moderately Aggressive is 3.77 times more volatile than Sterling Capital North. It trades about 0.12 of its potential returns per unit of risk. Sterling Capital North is currently generating about 0.14 per unit of risk. If you would invest 1,144 in Moderately Aggressive Balanced on September 1, 2024 and sell it today you would earn a total of 103.00 from holding Moderately Aggressive Balanced or generate 9.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Moderately Aggressive Balanced vs. Sterling Capital North
Performance |
| Timeline |
| Moderately Aggressive |
| Sterling Capital North |
Moderately Aggressive and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moderately Aggressive and Sterling Capital
The main advantage of trading using opposite Moderately Aggressive and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moderately Aggressive 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 Moderately Aggressive Balanced and Sterling Capital North 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. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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