Correlation Between Sierra Core and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Sierra Core 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 Sierra Core and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sierra E Retirement and Sterling Capital Short, you can compare the effects of market volatilities on Sierra Core 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 Sierra Core with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sierra Core and Sterling Capital.
Diversification Opportunities for Sierra Core and Sterling Capital
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sierra and Sterling is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sierra E Retirement 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 Sierra Core 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 Sierra E Retirement 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 Sierra Core i.e., Sierra Core and Sterling Capital go up and down completely randomly.
Pair Corralation between Sierra Core and Sterling Capital
Assuming the 90 days horizon Sierra E Retirement is expected to generate 3.47 times more return on investment than Sterling Capital. However, Sierra Core is 3.47 times more volatile than Sterling Capital Short. It trades about 0.4 of its potential returns per unit of risk. Sterling Capital Short is currently generating about 0.07 per unit of risk. If you would invest 2,249 in Sierra E Retirement on September 3, 2024 and sell it today you would earn a total of 57.00 from holding Sierra E Retirement or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sierra E Retirement vs. Sterling Capital Short
Performance |
| Timeline |
| Sierra E Retirement |
| Sterling Capital Short |
Sierra Core and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sierra Core and Sterling Capital
The main advantage of trading using opposite Sierra Core and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sierra Core 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.| Sierra Core vs. T Rowe Price | Sierra Core vs. T Rowe Price | Sierra Core vs. T Rowe Price | Sierra Core vs. Virtus Dfa 2040 |
| Sterling Capital vs. Europac Gold Fund | Sterling Capital vs. Oppenheimer Gold Special | Sterling Capital vs. Franklin Gold Precious | Sterling Capital vs. Goldman Sachs Short |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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