Correlation Between Sterling Check and Secureworks Corp

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

Diversification Opportunities for Sterling Check and Secureworks Corp

0.7

Correlation Coefficient

Sterling Check  Secureworks Corp

Poor diversification

The 3 months correlation between Sterling and Secureworks is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Check Corp and Secureworks Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secureworks Corp 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 Secureworks Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secureworks Corp has no effect on the direction of Sterling Check i.e., Sterling Check and Secureworks Corp go up and down completely randomly.

Pair Corralation between Sterling Check and Secureworks Corp

Given the investment horizon of 90 days Sterling Check Corp is expected to under-perform the Secureworks Corp. But the stock apears to be less risky and, when comparing its historical volatility, Sterling Check Corp is 2.56 times less risky than Secureworks Corp. The stock trades about -0.03 of its potential returns per unit of risk. The Secureworks Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  780.00  in Secureworks Corp on September 19, 2024 and sell it today you would earn a total of  66.00  from holding Secureworks Corp or generate 8.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	49.21%
Values	Daily Returns

Sterling Check Corp  vs.  Secureworks Corp

Sterling Check Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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.

Secureworks Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Secureworks Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Secureworks Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sterling Check and Secureworks Corp

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

The idea behind Sterling Check Corp and Secureworks Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..