Correlation Between Sterling Capital and Absolute Convertible
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Absolute Convertible 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 Sterling Capital and Absolute Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital Behavioral and Absolute Convertible Arbitrage, you can compare the effects of market volatilities on Sterling Capital and Absolute Convertible 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 Sterling Capital with a short position of Absolute Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Absolute Convertible.
Diversification Opportunities for Sterling Capital and Absolute Convertible
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sterling and Absolute is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Behavioral and Absolute Convertible Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Convertible and Sterling Capital 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 Sterling Capital Behavioral are associated (or correlated) with Absolute Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Convertible has no effect on the direction of Sterling Capital i.e., Sterling Capital and Absolute Convertible go up and down completely randomly.
Pair Corralation between Sterling Capital and Absolute Convertible
Assuming the 90 days horizon Sterling Capital Behavioral is expected to under-perform the Absolute Convertible. In addition to that, Sterling Capital is 15.1 times more volatile than Absolute Convertible Arbitrage. It trades about -0.01 of its total potential returns per unit of risk. Absolute Convertible Arbitrage is currently generating about 0.51 per unit of volatility. If you would invest 1,132 in Absolute Convertible Arbitrage on September 12, 2024 and sell it today you would earn a total of 19.00 from holding Absolute Convertible Arbitrage or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Behavioral vs. Absolute Convertible Arbitrage
Performance |
| Timeline |
| Sterling Capital Beh |
| Absolute Convertible |
Sterling Capital and Absolute Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Absolute Convertible
The main advantage of trading using opposite Sterling Capital and Absolute Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Absolute Convertible 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 Absolute Convertible will offset losses from the drop in Absolute Convertible's long position.| Sterling Capital vs. Blrc Sgy Mnp | Sterling Capital vs. T Rowe Price | Sterling Capital vs. California High Yield Municipal | Sterling Capital vs. Nuveen Minnesota Municipal |
| Absolute Convertible vs. Vy Goldman Sachs | Absolute Convertible vs. Invesco Gold Special | Absolute Convertible vs. Short Precious Metals | Absolute Convertible vs. Franklin Gold Precious |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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