Correlation Between Touchstone International and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Touchstone International and Sterling Capital 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 Touchstone International and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone International Equity and Sterling Capital Behavioral, you can compare the effects of market volatilities on Touchstone International and Sterling Capital 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 Touchstone International with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone International and Sterling Capital.
Diversification Opportunities for Touchstone International and Sterling Capital
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Touchstone and Sterling is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone International Equit and Sterling Capital Behavioral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Beh and Touchstone International 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 Touchstone International Equity are associated (or correlated) with Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Beh has no effect on the direction of Touchstone International i.e., Touchstone International and Sterling Capital go up and down completely randomly.
Pair Corralation between Touchstone International and Sterling Capital
Assuming the 90 days horizon Touchstone International Equity is expected to under-perform the Sterling Capital. In addition to that, Touchstone International is 2.36 times more volatile than Sterling Capital Behavioral. It trades about -0.17 of its total potential returns per unit of risk. Sterling Capital Behavioral is currently generating about 0.18 per unit of volatility. If you would invest 998.00 in Sterling Capital Behavioral on September 15, 2024 and sell it today you would earn a total of 21.00 from holding Sterling Capital Behavioral or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone International Equit vs. Sterling Capital Behavioral
Performance |
| Timeline |
| Touchstone International |
| Sterling Capital Beh |
Touchstone International and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone International and Sterling Capital
The main advantage of trading using opposite Touchstone International and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone International position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Touchstone International vs. Ft 9331 Corporate | Touchstone International vs. Multisector Bond Sma | Touchstone International vs. T Rowe Price | Touchstone International vs. The National Tax Free |
| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital South |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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