Correlation Between Sterling Capital and Federated Pennsylvania
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Federated Pennsylvania 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 Federated Pennsylvania into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital Porate and Federated Pennsylvania Municipal, you can compare the effects of market volatilities on Sterling Capital and Federated Pennsylvania 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 Federated Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Federated Pennsylvania.
Diversification Opportunities for Sterling Capital and Federated Pennsylvania
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sterling and Federated is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Porate and Federated Pennsylvania Municip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Pennsylvania 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 Porate are associated (or correlated) with Federated Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Pennsylvania has no effect on the direction of Sterling Capital i.e., Sterling Capital and Federated Pennsylvania go up and down completely randomly.
Pair Corralation between Sterling Capital and Federated Pennsylvania
Assuming the 90 days horizon Sterling Capital Porate is expected to generate 3.4 times more return on investment than Federated Pennsylvania. However, Sterling Capital is 3.4 times more volatile than Federated Pennsylvania Municipal. It trades about 0.03 of its potential returns per unit of risk. Federated Pennsylvania Municipal is currently generating about 0.07 per unit of risk. If you would invest 666.00 in Sterling Capital Porate on September 12, 2024 and sell it today you would earn a total of 45.00 from holding Sterling Capital Porate or generate 6.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Porate vs. Federated Pennsylvania Municip
Performance |
| Timeline |
| Sterling Capital Porate |
| Federated Pennsylvania |
Sterling Capital and Federated Pennsylvania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Federated Pennsylvania
The main advantage of trading using opposite Sterling Capital and Federated Pennsylvania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Federated Pennsylvania 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 Federated Pennsylvania will offset losses from the drop in Federated Pennsylvania's long position.The idea behind Sterling Capital Porate and Federated Pennsylvania Municipal 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.
| Federated Pennsylvania vs. Balanced Fund Investor | Federated Pennsylvania vs. Multimedia Portfolio Multimedia | Federated Pennsylvania vs. T Rowe Price | Federated Pennsylvania vs. L Abbett Fundamental |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |