Correlation Between Sterling Capital and Nexpoint Real
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Nexpoint Real 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 Sterling Capital and Nexpoint Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital North and Nexpoint Real Estate, you can compare the effects of market volatilities on Sterling Capital and Nexpoint Real 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 Sterling Capital with a short position of Nexpoint Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Nexpoint Real.
Diversification Opportunities for Sterling Capital and Nexpoint Real
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sterling and Nexpoint is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital North and Nexpoint Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexpoint Real Estate and Sterling 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 Sterling Capital North are associated (or correlated) with Nexpoint Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexpoint Real Estate has no effect on the direction of Sterling Capital i.e., Sterling Capital and Nexpoint Real go up and down completely randomly.
Pair Corralation between Sterling Capital and Nexpoint Real
Assuming the 90 days horizon Sterling Capital North is expected to generate 0.17 times more return on investment than Nexpoint Real. However, Sterling Capital North is 5.75 times less risky than Nexpoint Real. It trades about 0.03 of its potential returns per unit of risk. Nexpoint Real Estate is currently generating about -0.01 per unit of risk. If you would invest 981.00 in Sterling Capital North on September 30, 2024 and sell it today you would earn a total of 21.00 from holding Sterling Capital North or generate 2.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.4% |
Values | Daily Returns |
Sterling Capital North vs. Nexpoint Real Estate
Performance |
Timeline |
Sterling Capital North |
Nexpoint Real Estate |
Sterling Capital and Nexpoint Real Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sterling Capital and Nexpoint Real
The main advantage of trading using opposite Sterling Capital and Nexpoint Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Nexpoint Real 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 Nexpoint Real will offset losses from the drop in Nexpoint Real's long position.Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral |
Nexpoint Real vs. Vanguard Total Stock | Nexpoint Real vs. Vanguard 500 Index | Nexpoint Real vs. Vanguard Total Stock | Nexpoint Real vs. Vanguard Total Stock |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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