Correlation Between Sterling Capital and Hennessy Cornerstone
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Hennessy Cornerstone 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 Hennessy Cornerstone 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 Hennessy Nerstone Mid, you can compare the effects of market volatilities on Sterling Capital and Hennessy Cornerstone 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 Hennessy Cornerstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Hennessy Cornerstone.
Diversification Opportunities for Sterling Capital and Hennessy Cornerstone
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sterling and Hennessy is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Behavioral and Hennessy Nerstone Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Nerstone Mid 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 Hennessy Cornerstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Nerstone Mid has no effect on the direction of Sterling Capital i.e., Sterling Capital and Hennessy Cornerstone go up and down completely randomly.
Pair Corralation between Sterling Capital and Hennessy Cornerstone
Assuming the 90 days horizon Sterling Capital Behavioral is expected to under-perform the Hennessy Cornerstone. But the mutual fund apears to be less risky and, when comparing its historical volatility, Sterling Capital Behavioral is 1.4 times less risky than Hennessy Cornerstone. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Hennessy Nerstone Mid is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 2,648 in Hennessy Nerstone Mid on September 1, 2024 and sell it today you would earn a total of 251.00 from holding Hennessy Nerstone Mid or generate 9.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sterling Capital Behavioral vs. Hennessy Nerstone Mid
Performance |
| Timeline |
| Sterling Capital Beh |
| Hennessy Nerstone Mid |
Sterling Capital and Hennessy Cornerstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Hennessy Cornerstone
The main advantage of trading using opposite Sterling Capital and Hennessy Cornerstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Hennessy Cornerstone 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 Hennessy Cornerstone will offset losses from the drop in Hennessy Cornerstone's long position.| Sterling Capital vs. Hennessy Nerstone Mid | Sterling Capital vs. Palm Valley Capital | Sterling Capital vs. Amg River Road | Sterling Capital vs. Queens Road Small |
| Hennessy Cornerstone vs. Hennessy Focus Fund | Hennessy Cornerstone vs. Small Company Stock Fund | Hennessy Cornerstone vs. Large Cap E | Hennessy Cornerstone vs. Eventide Gilead Fund |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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