Correlation Between Locorr Market and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Locorr Market 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 Locorr Market and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Locorr Market Trend and Sterling Capital Stratton, you can compare the effects of market volatilities on Locorr Market 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 Locorr Market with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Locorr Market and Sterling Capital.
Diversification Opportunities for Locorr Market and Sterling Capital
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Locorr and Sterling is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Locorr Market Trend and Sterling Capital Stratton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Stratton and Locorr Market 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 Locorr Market Trend 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 Stratton has no effect on the direction of Locorr Market i.e., Locorr Market and Sterling Capital go up and down completely randomly.
Pair Corralation between Locorr Market and Sterling Capital
Assuming the 90 days horizon Locorr Market Trend is expected to under-perform the Sterling Capital. In addition to that, Locorr Market is 1.06 times more volatile than Sterling Capital Stratton. It trades about -0.01 of its total potential returns per unit of risk. Sterling Capital Stratton is currently generating about 0.04 per unit of volatility. If you would invest 3,846 in Sterling Capital Stratton on September 5, 2024 and sell it today you would earn a total of 68.00 from holding Sterling Capital Stratton or generate 1.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.44% |
Values | Daily Returns |
Locorr Market Trend vs. Sterling Capital Stratton
Performance |
Timeline |
Locorr Market Trend |
Sterling Capital Stratton |
Locorr Market and Sterling Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Locorr Market and Sterling Capital
The main advantage of trading using opposite Locorr Market and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Locorr Market 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.Locorr Market vs. Hartford Healthcare Hls | Locorr Market vs. The Gabelli Healthcare | Locorr Market vs. Baron Health Care | Locorr Market vs. Putnam Global Health |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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