Correlation Between Sterling Capital and Redwood Real
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Redwood Real 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 Redwood Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital Stratton and Redwood Real Estate, you can compare the effects of market volatilities on Sterling Capital and Redwood Real 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 Redwood Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Redwood Real.
Diversification Opportunities for Sterling Capital and Redwood Real
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sterling and Redwood is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Stratton and Redwood Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Real Estate 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 Stratton are associated (or correlated) with Redwood Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Real Estate has no effect on the direction of Sterling Capital i.e., Sterling Capital and Redwood Real go up and down completely randomly.
Pair Corralation between Sterling Capital and Redwood Real
Assuming the 90 days horizon Sterling Capital Stratton is expected to generate 29.69 times more return on investment than Redwood Real. However, Sterling Capital is 29.69 times more volatile than Redwood Real Estate. It trades about 0.07 of its potential returns per unit of risk. Redwood Real Estate is currently generating about 1.15 per unit of risk. If you would invest 3,596 in Sterling Capital Stratton on November 27, 2024 and sell it today you would earn a total of 37.00 from holding Sterling Capital Stratton or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Stratton vs. Redwood Real Estate
Performance |
| Timeline |
| Sterling Capital Stratton |
| Redwood Real Estate |
Sterling Capital and Redwood Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Redwood Real
The main advantage of trading using opposite Sterling Capital and Redwood Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Redwood Real 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 Redwood Real will offset losses from the drop in Redwood Real's long position.| Sterling Capital vs. Columbia Real Estate | Sterling Capital vs. Alpine Realty Income | Sterling Capital vs. Davis Real Estate | Sterling Capital vs. Sterling Capital Stratton |
| Redwood Real vs. Vanguard Total Stock | Redwood Real vs. Vanguard 500 Index | Redwood Real vs. Vanguard Total Stock | Redwood Real vs. Vanguard Total Stock |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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