Correlation Between Elfun Diversified and Sterling Capital

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

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

Diversification Opportunities for Elfun Diversified and Sterling Capital

0.13

Correlation Coefficient

Elfun Diversified  Sterling Capital

Average diversification

The 3 months correlation between Elfun and Sterling is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Diversified Fund 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 Elfun Diversified 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 Elfun Diversified Fund 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 Elfun Diversified i.e., Elfun Diversified and Sterling Capital go up and down completely randomly.

Pair Corralation between Elfun Diversified and Sterling Capital

Assuming the 90 days horizon Elfun Diversified Fund is expected to generate 0.66 times more return on investment than Sterling Capital. However, Elfun Diversified Fund is 1.51 times less risky than Sterling Capital. It trades about 0.09 of its potential returns per unit of risk. Sterling Capital Behavioral is currently generating about 0.01 per unit of risk. If you would invest  2,070  in Elfun Diversified Fund on September 15, 2024 and sell it today you would earn a total of  124.00  from holding Elfun Diversified Fund or generate 5.99% return on investment over 90 days.

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

Elfun Diversified Fund  vs.  Sterling Capital Behavioral

Elfun Diversified

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Elfun Diversified Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Elfun Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sterling Capital Beh

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sterling Capital Behavioral has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward 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 Elfun Diversified and Sterling Capital

The main advantage of trading using opposite Elfun Diversified and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elfun Diversified 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 Elfun Diversified Fund and Sterling Capital Behavioral 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.