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 Stratton, 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
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between California and Sterling is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Sterling Capital Stratton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Stratton 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 Stratton 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 is expected to generate 27.04 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, California Bond Fund is 2.66 times less risky than Sterling Capital. It trades about 0.01 of its potential returns per unit of risk. Sterling Capital Stratton is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 6,730 in Sterling Capital Stratton on August 31, 2024 and sell it today you would earn a total of 392.00 from holding Sterling Capital Stratton or generate 5.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. Sterling Capital Stratton
Performance |
| Timeline |
| California Bond |
| Sterling Capital Stratton |
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. Aqr Risk Balanced Modities | California Bond vs. California High Yield Municipal | California Bond vs. Ab High Income | California Bond vs. Pace High Yield |
| Sterling Capital vs. California Bond Fund | Sterling Capital vs. Legg Mason Partners | Sterling Capital vs. Ab Impact Municipal | Sterling Capital vs. Calamos Short Term Bond |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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