Correlation Between 70082LAB3 and Sterling Capital

Can any of the company-specific risk be diversified away by investing in both 70082LAB3 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 70082LAB3 and Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US70082LAB36 and Sterling Capital Focus, you can compare the effects of market volatilities on 70082LAB3 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 70082LAB3 with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of 70082LAB3 and Sterling Capital.

Diversification Opportunities for 70082LAB3 and Sterling Capital

0.73

Correlation Coefficient

70082LAB3  Sterling Capital

Poor diversification

The 3 months correlation between 70082LAB3 and Sterling is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding US70082LAB36 and Sterling Capital Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Focus and 70082LAB3 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 US70082LAB36 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 Focus has no effect on the direction of 70082LAB3 i.e., 70082LAB3 and Sterling Capital go up and down completely randomly.

Pair Corralation between 70082LAB3 and Sterling Capital

Assuming the 90 days trading horizon 70082LAB3 is expected to generate 1.18 times less return on investment than Sterling Capital. In addition to that, 70082LAB3 is 1.11 times more volatile than Sterling Capital Focus. It trades about 0.07 of its total potential returns per unit of risk. Sterling Capital Focus is currently generating about 0.09 per unit of volatility. If you would invest  2,834  in Sterling Capital Focus on October 1, 2024 and sell it today you would earn a total of  189.30  from holding Sterling Capital Focus or generate 6.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	64.06%
Values	Daily Returns

US70082LAB36  vs.  Sterling Capital Focus

US70082LAB36

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in US70082LAB36 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 70082LAB3 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sterling Capital Focus

Risk-Adjusted Performance

7 of 100

OK

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.

Pair Trading with 70082LAB3 and Sterling Capital

The main advantage of trading using opposite 70082LAB3 and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 70082LAB3 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 US70082LAB36 and Sterling Capital Focus 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.