Correlation Between Sterling Capital and RiverFront Dynamic

Can any of the company-specific risk be diversified away by investing in both Sterling Capital and RiverFront Dynamic 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 RiverFront Dynamic 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 RiverFront Dynamic Dividend, you can compare the effects of market volatilities on Sterling Capital and RiverFront Dynamic 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 RiverFront Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and RiverFront Dynamic.

Diversification Opportunities for Sterling Capital and RiverFront Dynamic

0.9

Correlation Coefficient

Sterling Capital  RiverFront Dynamic

Almost no diversification

The 3 months correlation between Sterling and RiverFront is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Focus and RiverFront Dynamic Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverFront Dynamic 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 RiverFront Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RiverFront Dynamic has no effect on the direction of Sterling Capital i.e., Sterling Capital and RiverFront Dynamic go up and down completely randomly.

Pair Corralation between Sterling Capital and RiverFront Dynamic

Considering the 90-day investment horizon Sterling Capital Focus is expected to under-perform the RiverFront Dynamic. In addition to that, Sterling Capital is 1.42 times more volatile than RiverFront Dynamic Dividend. It trades about -0.1 of its total potential returns per unit of risk. RiverFront Dynamic Dividend is currently generating about -0.14 per unit of volatility. If you would invest  5,796  in RiverFront Dynamic Dividend on September 25, 2024 and sell it today you would lose (140.00) from holding RiverFront Dynamic Dividend or give up 2.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.24%
Values	Daily Returns

Sterling Capital Focus  vs.  RiverFront Dynamic Dividend

Sterling Capital Focus

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Focus are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Sterling Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

RiverFront Dynamic

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RiverFront Dynamic Dividend are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, RiverFront Dynamic is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sterling Capital and RiverFront Dynamic

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

The idea behind Sterling Capital Focus and RiverFront Dynamic Dividend 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.