Correlation Between Sterling Construction and Corporate Travel
Can any of the company-specific risk be diversified away by investing in both Sterling Construction and Corporate Travel 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 Corporate Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and Corporate Travel Management, you can compare the effects of market volatilities on Sterling Construction and Corporate Travel 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 Corporate Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and Corporate Travel.
Diversification Opportunities for Sterling Construction and Corporate Travel
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sterling and Corporate is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and Corporate Travel Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Travel Man 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 Corporate Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Travel Man has no effect on the direction of Sterling Construction i.e., Sterling Construction and Corporate Travel go up and down completely randomly.
Pair Corralation between Sterling Construction and Corporate Travel
Assuming the 90 days horizon Sterling Construction is expected to generate 1.56 times more return on investment than Corporate Travel. However, Sterling Construction is 1.56 times more volatile than Corporate Travel Management. It trades about 0.32 of its potential returns per unit of risk. Corporate Travel Management is currently generating about 0.31 per unit of risk. If you would invest 14,055 in Sterling Construction on August 27, 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Construction vs. Corporate Travel Management
Performance |
| Timeline |
| Sterling Construction |
| Corporate Travel Man |
Sterling Construction and Corporate Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and Corporate Travel
The main advantage of trading using opposite Sterling Construction and Corporate Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction position performs unexpectedly, Corporate Travel 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 Corporate Travel will offset losses from the drop in Corporate Travel's long position.| Sterling Construction vs. China Railway Construction | Sterling Construction vs. AECOM | Sterling Construction vs. Superior Plus Corp | Sterling Construction vs. NMI Holdings |
| Corporate Travel vs. Penta Ocean Construction Co | Corporate Travel vs. Daito Trust Construction | Corporate Travel vs. Sterling Construction | Corporate Travel vs. WIMFARM SA EO |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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