Correlation Between Vanguard Institutional and Sterling Capital

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

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

Diversification Opportunities for Vanguard Institutional and Sterling Capital

0.8

Correlation Coefficient

Vanguard Institutional  Sterling Capital

Very poor diversification

The 3 months correlation between VANGUARD and STERLING is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Institutional Short T and Sterling Capital Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Short and Vanguard Institutional 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 Vanguard Institutional Short Term 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 Short has no effect on the direction of Vanguard Institutional i.e., Vanguard Institutional and Sterling Capital go up and down completely randomly.

Pair Corralation between Vanguard Institutional and Sterling Capital

Assuming the 90 days horizon Vanguard Institutional is expected to generate 1.96 times less return on investment than Sterling Capital. But when comparing it to its historical volatility, Vanguard Institutional Short Term is 1.13 times less risky than Sterling Capital. It trades about 0.05 of its potential returns per unit of risk. Sterling Capital Short is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  831.00  in Sterling Capital Short on September 3, 2024 and sell it today you would earn a total of  5.00  from holding Sterling Capital Short or generate 0.6% return on investment over 90 days.

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

Vanguard Institutional Short T  vs.  Sterling Capital Short

Vanguard Institutional

Risk-Adjusted Performance

3 of 100

Insignificant

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

Sterling Capital Short

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Short are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Sterling Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Institutional and Sterling Capital

The main advantage of trading using opposite Vanguard Institutional and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Institutional 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 Vanguard Institutional Short Term and Sterling Capital Short 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 Commodity Directory module to find actively traded commodities issued by global exchanges.