Correlation Between Sterling Capital and Small Cap
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Small Cap 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 Small Cap 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 Small Cap Stock, you can compare the effects of market volatilities on Sterling Capital and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Small Cap.
Diversification Opportunities for Sterling Capital and Small Cap
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sterling and Small is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Behavioral and Small Cap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Stock 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Stock has no effect on the direction of Sterling Capital i.e., Sterling Capital and Small Cap go up and down completely randomly.
Pair Corralation between Sterling Capital and Small Cap
Assuming the 90 days horizon Sterling Capital Behavioral is expected to under-perform the Small Cap. In addition to that, Sterling Capital is 1.81 times more volatile than Small Cap Stock. It trades about -0.22 of its total potential returns per unit of risk. Small Cap Stock is currently generating about -0.04 per unit of volatility. If you would invest 1,509 in Small Cap Stock on September 13, 2024 and sell it today you would lose (12.00) from holding Small Cap Stock or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sterling Capital Behavioral vs. Small Cap Stock
Performance |
| Timeline |
| Sterling Capital Beh |
| Small Cap Stock |
Sterling Capital and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Small Cap
The main advantage of trading using opposite Sterling Capital and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral |
| Small Cap vs. Goldman Sachs Real | Small Cap vs. Fidelity Real Estate | Small Cap vs. Redwood Real Estate | Small Cap vs. Vy Clarion Real |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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