Correlation Between Sterling Capital and Transamerica Large
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Transamerica Large 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 Transamerica Large 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 Transamerica Large Cap, you can compare the effects of market volatilities on Sterling Capital and Transamerica Large 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 Transamerica Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Transamerica Large.
Diversification Opportunities for Sterling Capital and Transamerica Large
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between STERLING and Transamerica is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Stratton and Transamerica Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Large Cap 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 Transamerica Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Large Cap has no effect on the direction of Sterling Capital i.e., Sterling Capital and Transamerica Large go up and down completely randomly.
Pair Corralation between Sterling Capital and Transamerica Large
Assuming the 90 days horizon Sterling Capital is expected to generate 15.8 times less return on investment than Transamerica Large. In addition to that, Sterling Capital is 2.82 times more volatile than Transamerica Large Cap. It trades about 0.0 of its total potential returns per unit of risk. Transamerica Large Cap is currently generating about 0.13 per unit of volatility. If you would invest 1,145 in Transamerica Large Cap on September 2, 2024 and sell it today you would earn a total of 424.00 from holding Transamerica Large Cap or generate 37.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Sterling Capital Stratton vs. Transamerica Large Cap
Performance |
Timeline |
Sterling Capital Stratton |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Transamerica Large Cap |
Sterling Capital and Transamerica Large Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sterling Capital and Transamerica Large
The main advantage of trading using opposite Sterling Capital and Transamerica Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Transamerica Large 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 Transamerica Large will offset losses from the drop in Transamerica Large's long position.Sterling Capital vs. Ambrus Core Bond | Sterling Capital vs. Thrivent Income Fund | Sterling Capital vs. T Rowe Price | Sterling Capital vs. Federated Ultrashort Bond |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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