Correlation Between Bond Fund and Sterling Capital

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

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

Diversification Opportunities for Bond Fund and Sterling Capital

0.99

Correlation Coefficient

Bond Fund  Sterling Capital

No risk reduction

The 3 months correlation between Bond and Sterling is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Bond Fund Of and Sterling Capital Securitized in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Sec and Bond Fund 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 Bond Fund Of 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 Sec has no effect on the direction of Bond Fund i.e., Bond Fund and Sterling Capital go up and down completely randomly.

Pair Corralation between Bond Fund and Sterling Capital

Assuming the 90 days horizon Bond Fund Of is expected to generate 1.1 times more return on investment than Sterling Capital. However, Bond Fund is 1.1 times more volatile than Sterling Capital Securitized. It trades about 0.11 of its potential returns per unit of risk. Sterling Capital Securitized is currently generating about 0.11 per unit of risk. If you would invest  1,114  in Bond Fund Of on May 5, 2025 and sell it today you would earn a total of  23.00  from holding Bond Fund Of or generate 2.06% return on investment over 90 days.

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

Bond Fund Of  vs.  Sterling Capital Securitized

Bond Fund

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bond Fund Of are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Bond Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sterling Capital Sec

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Securitized are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 Bond Fund and Sterling Capital

The main advantage of trading using opposite Bond Fund and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bond Fund 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 Bond Fund Of and Sterling Capital Securitized 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.