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 Diversified and Sterling Capital Behavioral, 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
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and Sterling is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Sterling Capital Behavioral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Beh 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 Diversified 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 Beh 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 6.44 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, Western Asset Diversified is 2.25 times less risky than Sterling Capital. It trades about 0.05 of its potential returns per unit of risk. Sterling Capital Behavioral is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,316 in Sterling Capital Behavioral on September 14, 2024 and sell it today you would earn a total of 767.00 from holding Sterling Capital Behavioral or generate 33.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Sterling Capital Behavioral
Performance |
| Timeline |
| Western Asset Diversified |
| Sterling Capital Beh |
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. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Sterling Capital vs. Wasatch Small Cap | Sterling Capital vs. Pimco Diversified Income | Sterling Capital vs. Blackrock Sm Cap | Sterling Capital vs. Western Asset Diversified |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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