Correlation Between Sterling Capital and Absolute Core
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Absolute Core 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 Absolute Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital Focus and Absolute Core Strategy, you can compare the effects of market volatilities on Sterling Capital and Absolute Core 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 Absolute Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Absolute Core.
Diversification Opportunities for Sterling Capital and Absolute Core
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sterling and Absolute is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Focus and Absolute Core Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Core Strategy 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 Focus are associated (or correlated) with Absolute Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Core Strategy has no effect on the direction of Sterling Capital i.e., Sterling Capital and Absolute Core go up and down completely randomly.
Pair Corralation between Sterling Capital and Absolute Core
Considering the 90-day investment horizon Sterling Capital Focus is expected to generate 2.21 times more return on investment than Absolute Core. However, Sterling Capital is 2.21 times more volatile than Absolute Core Strategy. It trades about 0.07 of its potential returns per unit of risk. Absolute Core Strategy is currently generating about 0.08 per unit of risk. If you would invest 2,706 in Sterling Capital Focus on September 25, 2024 and sell it today you would earn a total of 319.00 from holding Sterling Capital Focus or generate 11.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Sterling Capital Focus vs. Absolute Core Strategy
Performance |
Timeline |
Sterling Capital Focus |
Absolute Core Strategy |
Sterling Capital and Absolute Core Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sterling Capital and Absolute Core
The main advantage of trading using opposite Sterling Capital and Absolute Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Absolute Core 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 Absolute Core will offset losses from the drop in Absolute Core's long position.Sterling Capital vs. Absolute Core Strategy | Sterling Capital vs. iShares ESG Advanced | Sterling Capital vs. PIMCO RAFI Dynamic | Sterling Capital vs. HCM Defender 100 |
Absolute Core vs. Salon City | Absolute Core vs. Northern Lights | Absolute Core vs. Sterling Capital Focus | Absolute Core vs. Aquagold International |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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