Correlation Between T Rowe and Sterling Capital

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

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

Diversification Opportunities for T Rowe and Sterling Capital

-0.62

Correlation Coefficient

T Rowe  Sterling Capital

Excellent diversification

The 3 months correlation between TRBCX and Sterling is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Sterling Capital Behavioral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Beh and T Rowe 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 T Rowe Price 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 Beh has no effect on the direction of T Rowe i.e., T Rowe and Sterling Capital go up and down completely randomly.

Pair Corralation between T Rowe and Sterling Capital

Assuming the 90 days horizon T Rowe Price is expected to under-perform the Sterling Capital. In addition to that, T Rowe is 3.91 times more volatile than Sterling Capital Behavioral. It trades about -0.06 of its total potential returns per unit of risk. Sterling Capital Behavioral is currently generating about 0.17 per unit of volatility. If you would invest  999.00  in Sterling Capital Behavioral on September 16, 2024 and sell it today you would earn a total of  19.00  from holding Sterling Capital Behavioral or generate 1.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

T Rowe Price  vs.  Sterling Capital Behavioral

T Rowe Price

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in T Rowe Price are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, T Rowe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sterling Capital Beh

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sterling Capital Behavioral has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Sterling Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with T Rowe and Sterling Capital

The main advantage of trading using opposite T Rowe and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe 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.

The idea behind T Rowe Price and Sterling Capital Behavioral 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.