Correlation Between Calvert Small and Sterling Capital

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

By analyzing existing cross correlation between Calvert Small Cap and Sterling Capital Total, you can compare the effects of market volatilities on Calvert Small 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 Calvert Small with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Small and Sterling Capital.

Diversification Opportunities for Calvert Small and Sterling Capital

-0.36

Correlation Coefficient

Calvert Small  Sterling Capital

Very good diversification

The 3 months correlation between Calvert and Sterling is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Small Cap 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 Calvert Small 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 Calvert Small Cap 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 Calvert Small i.e., Calvert Small and Sterling Capital go up and down completely randomly.

Pair Corralation between Calvert Small and Sterling Capital

Assuming the 90 days horizon Calvert Small Cap is expected to generate 3.55 times more return on investment than Sterling Capital. However, Calvert Small is 3.55 times more volatile than Sterling Capital Total. It trades about 0.09 of its potential returns per unit of risk. Sterling Capital Total is currently generating about -0.13 per unit of risk. If you would invest  2,710  in Calvert Small Cap on September 15, 2024 and sell it today you would earn a total of  166.00  from holding Calvert Small Cap or generate 6.13% return on investment over 90 days.

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

Calvert Small Cap  vs.  Sterling Capital Total

Calvert Small Cap

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Small Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Calvert Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sterling Capital Total

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Calvert Small and Sterling Capital

The main advantage of trading using opposite Calvert Small and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Small 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.

The idea behind Calvert Small Cap and Sterling Capital Total 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.