Correlation Between California Bond and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both California Bond 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 California Bond and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Bond Fund and Sterling Capital Short, you can compare the effects of market volatilities on California Bond 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 California Bond with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Sterling Capital.
Diversification Opportunities for California Bond and Sterling Capital
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between California and Sterling is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Sterling Capital Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Short and California Bond 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 California Bond Fund 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 Short has no effect on the direction of California Bond i.e., California Bond and Sterling Capital go up and down completely randomly.
Pair Corralation between California Bond and Sterling Capital
Assuming the 90 days horizon California Bond Fund is expected to under-perform the Sterling Capital. In addition to that, California Bond is 2.92 times more volatile than Sterling Capital Short. It trades about -0.03 of its total potential returns per unit of risk. Sterling Capital Short is currently generating about 0.06 per unit of volatility. If you would invest 835.00 in Sterling Capital Short on November 3, 2024 and sell it today you would earn a total of 1.00 from holding Sterling Capital Short or generate 0.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. Sterling Capital Short
Performance |
| Timeline |
| California Bond |
| Sterling Capital Short |
California Bond and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Sterling Capital
The main advantage of trading using opposite California Bond and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond 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.| California Bond vs. T Rowe Price | California Bond vs. Growth Portfolio Class | California Bond vs. Ab Global Bond | California Bond vs. Tax Managed Large Cap |
| Sterling Capital vs. Financial Industries Fund | Sterling Capital vs. Goldman Sachs Financial | Sterling Capital vs. Prudential Financial Services | Sterling Capital vs. Icon Financial Fund |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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