Correlation Between Sterling Capital and Gabelli Convertible

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

By analyzing existing cross correlation between Sterling Capital Equity and Gabelli Convertible And, you can compare the effects of market volatilities on Sterling Capital and Gabelli Convertible 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 Gabelli Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Gabelli Convertible.

Diversification Opportunities for Sterling Capital and Gabelli Convertible

0.8

Correlation Coefficient

Sterling Capital  Gabelli Convertible

Very poor diversification

The 3 months correlation between Sterling and Gabelli is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Equity and Gabelli Convertible And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Convertible And 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 Equity are associated (or correlated) with Gabelli Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Convertible And has no effect on the direction of Sterling Capital i.e., Sterling Capital and Gabelli Convertible go up and down completely randomly.

Pair Corralation between Sterling Capital and Gabelli Convertible

Assuming the 90 days horizon Sterling Capital is expected to generate 3.66 times less return on investment than Gabelli Convertible. In addition to that, Sterling Capital is 1.02 times more volatile than Gabelli Convertible And. It trades about 0.07 of its total potential returns per unit of risk. Gabelli Convertible And is currently generating about 0.27 per unit of volatility. If you would invest  344.00  in Gabelli Convertible And on May 5, 2025 and sell it today you would earn a total of  46.00  from holding Gabelli Convertible And or generate 13.37% return on investment over 90 days.

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

Sterling Capital Equity  vs.  Gabelli Convertible And

Sterling Capital Equity

Risk-Adjusted Performance

Modest

Over the last 90 days Sterling Capital Equity 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.

Gabelli Convertible And

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Convertible And are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly uncertain fundamental indicators, Gabelli Convertible showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sterling Capital and Gabelli Convertible

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

The idea behind Sterling Capital Equity and Gabelli Convertible And 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.