Correlation Between Via Renewables and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Via Renewables 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 Via Renewables and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Via Renewables and Sterling Capital Special, you can compare the effects of market volatilities on Via Renewables 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 Via Renewables with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Via Renewables and Sterling Capital.
Diversification Opportunities for Via Renewables and Sterling Capital
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Via and Sterling is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and Sterling Capital Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Special and Via Renewables 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 Via Renewables 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 Special has no effect on the direction of Via Renewables i.e., Via Renewables and Sterling Capital go up and down completely randomly.
Pair Corralation between Via Renewables and Sterling Capital
Assuming the 90 days horizon Via Renewables is expected to generate 2.68 times more return on investment than Sterling Capital. However, Via Renewables is 2.68 times more volatile than Sterling Capital Special. It trades about 0.03 of its potential returns per unit of risk. Sterling Capital Special is currently generating about 0.05 per unit of risk. If you would invest 1,809 in Via Renewables on September 3, 2024 and sell it today you would earn a total of 407.00 from holding Via Renewables or generate 22.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Via Renewables vs. Sterling Capital Special
Performance |
| Timeline |
| Via Renewables |
| Sterling Capital Special |
Via Renewables and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Via Renewables and Sterling Capital
The main advantage of trading using opposite Via Renewables and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Via Renewables 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.| Via Renewables vs. CMS Energy | Via Renewables vs. ACRES Commercial Realty | Via Renewables vs. Atlanticus Holdings Corp |
| Sterling Capital vs. Alliancebernstein Global High | Sterling Capital vs. Siit Global Managed | Sterling Capital vs. 361 Global Longshort | Sterling Capital vs. Qs Global Equity |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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