Correlation Between Sterling Check and EverCommerce

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

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

Diversification Opportunities for Sterling Check and EverCommerce

0.51

Correlation Coefficient

Sterling Check  EverCommerce

Very weak diversification

The 3 months correlation between Sterling and EverCommerce is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Check Corp and EverCommerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EverCommerce and Sterling Check 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 Check Corp are associated (or correlated) with EverCommerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EverCommerce has no effect on the direction of Sterling Check i.e., Sterling Check and EverCommerce go up and down completely randomly.

Pair Corralation between Sterling Check and EverCommerce

Given the investment horizon of 90 days Sterling Check is expected to generate 2.48 times less return on investment than EverCommerce. But when comparing it to its historical volatility, Sterling Check Corp is 1.77 times less risky than EverCommerce. It trades about 0.08 of its potential returns per unit of risk. EverCommerce is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,071  in EverCommerce on August 30, 2024 and sell it today you would earn a total of  132.00  from holding EverCommerce or generate 12.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	69.84%
Values	Daily Returns

Sterling Check Corp  vs.  EverCommerce

Sterling Check Corp

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Sterling Check Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Sterling Check is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

EverCommerce

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EverCommerce are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, EverCommerce displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sterling Check and EverCommerce

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

The idea behind Sterling Check Corp and EverCommerce 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.