Correlation Between Sterling Capital and Stralem Equity
Can any of the company-specific risk be diversified away by investing in both Sterling Capital and Stralem Equity 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 Capital and Stralem Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital Behavioral and Stralem Equity Fund, you can compare the effects of market volatilities on Sterling Capital and Stralem Equity 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 Capital with a short position of Stralem Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Stralem Equity.
Diversification Opportunities for Sterling Capital and Stralem Equity
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sterling and Stralem is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Behavioral and Stralem Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stralem Equity and Sterling Capital 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 Capital Behavioral are associated (or correlated) with Stralem Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stralem Equity has no effect on the direction of Sterling Capital i.e., Sterling Capital and Stralem Equity go up and down completely randomly.
Pair Corralation between Sterling Capital and Stralem Equity
Assuming the 90 days horizon Sterling Capital Behavioral is expected to generate 0.93 times more return on investment than Stralem Equity. However, Sterling Capital Behavioral is 1.07 times less risky than Stralem Equity. It trades about -0.06 of its potential returns per unit of risk. Stralem Equity Fund is currently generating about -0.22 per unit of risk. If you would invest 1,007 in Sterling Capital Behavioral on January 30, 2024 and sell it today you would lose (10.00) from holding Sterling Capital Behavioral or give up 0.99% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Sterling Capital Behavioral vs. Stralem Equity Fund
Performance |
Timeline |
Sterling Capital Beh |
Stralem Equity |
Sterling Capital and Stralem Equity Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sterling Capital and Stralem Equity
The main advantage of trading using opposite Sterling Capital and Stralem Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, Stralem Equity 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 Stralem Equity will offset losses from the drop in Stralem Equity's long position.Sterling Capital vs. Royce Global Financial | Sterling Capital vs. Angel Oak Financial | Sterling Capital vs. Icon Financial Fund | Sterling Capital vs. John Hancock Financial |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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