Correlation Between Sterling Construction and UNITED URBAN
Can any of the company-specific risk be diversified away by investing in both Sterling Construction and UNITED URBAN 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 Construction and UNITED URBAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and UNITED URBAN INV, you can compare the effects of market volatilities on Sterling Construction and UNITED URBAN 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 Construction with a short position of UNITED URBAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and UNITED URBAN.
Diversification Opportunities for Sterling Construction and UNITED URBAN
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sterling and UNITED is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and UNITED URBAN INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED URBAN INV and Sterling Construction 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 Construction are associated (or correlated) with UNITED URBAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED URBAN INV has no effect on the direction of Sterling Construction i.e., Sterling Construction and UNITED URBAN go up and down completely randomly.
Pair Corralation between Sterling Construction and UNITED URBAN
Assuming the 90 days horizon Sterling Construction is expected to generate 7.81 times more return on investment than UNITED URBAN. However, Sterling Construction is 7.81 times more volatile than UNITED URBAN INV. It trades about 0.31 of its potential returns per unit of risk. UNITED URBAN INV is currently generating about 0.47 per unit of risk. If you would invest 14,055 in Sterling Construction on August 28, 2024 and sell it today you would earn a total of 4,700 from holding Sterling Construction or generate 33.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Construction vs. UNITED URBAN INV
Performance |
| Timeline |
| Sterling Construction |
| UNITED URBAN INV |
Sterling Construction and UNITED URBAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and UNITED URBAN
The main advantage of trading using opposite Sterling Construction and UNITED URBAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction position performs unexpectedly, UNITED URBAN 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 UNITED URBAN will offset losses from the drop in UNITED URBAN's long position.| Sterling Construction vs. Seven West Media | Sterling Construction vs. ZINC MEDIA GR | Sterling Construction vs. AWILCO DRILLING PLC | Sterling Construction vs. ATRESMEDIA |
| UNITED URBAN vs. Apple Inc | UNITED URBAN vs. Apple Inc | UNITED URBAN vs. Apple Inc | UNITED URBAN vs. Apple Inc |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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