Correlation Between Versus Capital and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Versus Capital 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 Versus Capital and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Versus Capital Multi Manager and Sterling Capital Stratton, you can compare the effects of market volatilities on Versus Capital 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 Versus Capital with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Versus Capital and Sterling Capital.
Diversification Opportunities for Versus Capital and Sterling Capital
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Versus and Sterling is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Versus Capital Multi Manager 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 Versus Capital 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 Versus Capital Multi Manager 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 Versus Capital i.e., Versus Capital and Sterling Capital go up and down completely randomly.
Pair Corralation between Versus Capital and Sterling Capital
Assuming the 90 days horizon Versus Capital Multi Manager is expected to under-perform the Sterling Capital. But the mutual fund apears to be less risky and, when comparing its historical volatility, Versus Capital Multi Manager is 6.75 times less risky than Sterling Capital. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Sterling Capital Stratton is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,415 in Sterling Capital Stratton on November 27, 2024 and sell it today you would earn a total of 218.00 from holding Sterling Capital Stratton or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.58% |
| Values | Daily Returns |
Versus Capital Multi Manager vs. Sterling Capital Stratton
Performance |
| Timeline |
| Versus Capital Multi |
| Sterling Capital Stratton |
Versus Capital and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Versus Capital and Sterling Capital
The main advantage of trading using opposite Versus Capital and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Versus Capital 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.| Versus Capital vs. Lord Abbett Intermediate | Versus Capital vs. Federated Government Income | Versus Capital vs. Us Government Securities | Versus Capital vs. T Rowe Price |
| Sterling Capital vs. Columbia Real Estate | Sterling Capital vs. Alpine Realty Income | Sterling Capital vs. Davis Real Estate | Sterling Capital vs. Sterling Capital Stratton |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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