Correlation Between Sterling Capital and Dodge International

Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Dodge International 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 Dodge International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sterling Capital Special and Dodge International Stock, you can compare the effects of market volatilities on Sterling Capital and Dodge International 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 Dodge International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Dodge International.

Diversification Opportunities for Sterling Capital and Dodge International

-0.54

Correlation Coefficient

Sterling Capital  Dodge International

Excellent diversification

The 3 months correlation between Sterling and Dodge is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Special and Dodge International Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge International Stock 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 Special are associated (or correlated) with Dodge International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodge International Stock has no effect on the direction of Sterling Capital i.e., Sterling Capital and Dodge International go up and down completely randomly.

Pair Corralation between Sterling Capital and Dodge International

Assuming the 90 days horizon Sterling Capital Special is expected to generate 1.05 times more return on investment than Dodge International. However, Sterling Capital is 1.05 times more volatile than Dodge International Stock. It trades about 0.17 of its potential returns per unit of risk. Dodge International Stock is currently generating about 0.0 per unit of risk. If you would invest  3,017  in Sterling Capital Special on September 13, 2024 and sell it today you would earn a total of  272.00  from holding Sterling Capital Special or generate 9.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sterling Capital Special  vs.  Dodge International Stock

Sterling Capital Special

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Special are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Sterling Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dodge International Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dodge International Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Dodge International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sterling Capital and Dodge International

The main advantage of trading using opposite Sterling Capital and Dodge International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Dodge International 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 Dodge International will offset losses from the drop in Dodge International's long position.

The idea behind Sterling Capital Special and Dodge International Stock pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.