Correlation Between Sterling Capital and Nationwide Highmark
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Nationwide Highmark 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 Nationwide Highmark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital Total and Nationwide Highmark Small, you can compare the effects of market volatilities on Sterling Capital and Nationwide Highmark 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 Nationwide Highmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Nationwide Highmark.
Diversification Opportunities for Sterling Capital and Nationwide Highmark
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sterling and Nationwide is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Total and Nationwide Highmark Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Highmark Small 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 Total are associated (or correlated) with Nationwide Highmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Highmark Small has no effect on the direction of Sterling Capital i.e., Sterling Capital and Nationwide Highmark go up and down completely randomly.
Pair Corralation between Sterling Capital and Nationwide Highmark
Assuming the 90 days horizon Sterling Capital is expected to generate 2.85 times less return on investment than Nationwide Highmark. But when comparing it to its historical volatility, Sterling Capital Total is 3.66 times less risky than Nationwide Highmark. It trades about 0.09 of its potential returns per unit of risk. Nationwide Highmark Small is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,938 in Nationwide Highmark Small on August 26, 2024 and sell it today you would earn a total of 327.00 from holding Nationwide Highmark Small or generate 11.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Total vs. Nationwide Highmark Small
Performance |
| Timeline |
| Sterling Capital Total |
| Nationwide Highmark Small |
Sterling Capital and Nationwide Highmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Nationwide Highmark
The main advantage of trading using opposite Sterling Capital and Nationwide Highmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Nationwide Highmark 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 Nationwide Highmark will offset losses from the drop in Nationwide Highmark's long position.| Sterling Capital vs. The Hartford Global | Sterling Capital vs. Barings Global Floating | Sterling Capital vs. Scharf Global Opportunity | Sterling Capital vs. T Rowe Price |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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