Correlation Between Sterling Capital and Health Biotchnology
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Health Biotchnology 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 Health Biotchnology 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 Health Biotchnology Portfolio, you can compare the effects of market volatilities on Sterling Capital and Health Biotchnology 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 Health Biotchnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Health Biotchnology.
Diversification Opportunities for Sterling Capital and Health Biotchnology
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between STERLING and HEALTH is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Stratton and Health Biotchnology Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Biotchnology 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 Health Biotchnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Biotchnology has no effect on the direction of Sterling Capital i.e., Sterling Capital and Health Biotchnology go up and down completely randomly.
Pair Corralation between Sterling Capital and Health Biotchnology
Assuming the 90 days horizon Sterling Capital Stratton is expected to generate 1.06 times more return on investment than Health Biotchnology. However, Sterling Capital is 1.06 times more volatile than Health Biotchnology Portfolio. It trades about 0.06 of its potential returns per unit of risk. Health Biotchnology Portfolio is currently generating about -0.06 per unit of risk. If you would invest 3,994 in Sterling Capital Stratton on August 30, 2024 and sell it today you would earn a total of 82.00 from holding Sterling Capital Stratton or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Stratton vs. Health Biotchnology Portfolio
Performance |
| Timeline |
| Sterling Capital Stratton |
| Health Biotchnology |
Sterling Capital and Health Biotchnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Health Biotchnology
The main advantage of trading using opposite Sterling Capital and Health Biotchnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Health Biotchnology 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 Health Biotchnology will offset losses from the drop in Health Biotchnology'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 |
| Health Biotchnology vs. Redwood Real Estate | Health Biotchnology vs. Tiaa Cref Real Estate | Health Biotchnology vs. Sterling Capital Stratton | Health Biotchnology vs. Us Real Estate |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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