Correlation Between Western Asset and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Municipal and Sterling Capital Total, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Sterling Capital.
Diversification Opportunities for Western Asset and Sterling Capital
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and Sterling is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Sterling Capital Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Total and Western Asset 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 Western Asset Municipal 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 Total has no effect on the direction of Western Asset i.e., Western Asset and Sterling Capital go up and down completely randomly.
Pair Corralation between Western Asset and Sterling Capital
Assuming the 90 days horizon Western Asset is expected to generate 65.0 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, Western Asset Municipal is 1.23 times less risky than Sterling Capital. It trades about 0.0 of its potential returns per unit of risk. Sterling Capital Total is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 915.00 in Sterling Capital Total on September 12, 2024 and sell it today you would earn a total of 22.00 from holding Sterling Capital Total or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.2% |
| Values | Daily Returns |
Western Asset Municipal vs. Sterling Capital Total
Performance |
| Timeline |
| Western Asset Municipal |
| Sterling Capital Total |
Western Asset and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Sterling Capital
The main advantage of trading using opposite Western Asset and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Barings Active Short | Western Asset vs. Cmg Ultra Short | Western Asset vs. Blackrock Short Term Inflat Protected | Western Asset vs. Rbc Short Duration |
| Sterling Capital vs. Blrc Sgy Mnp | Sterling Capital vs. Pace High Yield | Sterling Capital vs. Western Asset Municipal | Sterling Capital vs. Ambrus Core 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |