Correlation Between Us Small and Sterling Capital

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

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

Diversification Opportunities for Us Small and Sterling Capital

0.96

Correlation Coefficient

Us Small  Sterling Capital

Almost no diversification

The 3 months correlation between DFSVX and Sterling is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Us Small Cap and Sterling Capital Behavioral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Beh and Us Small 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 Us Small Cap 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 Beh has no effect on the direction of Us Small i.e., Us Small and Sterling Capital go up and down completely randomly.

Pair Corralation between Us Small and Sterling Capital

Assuming the 90 days horizon Us Small Cap is expected to generate 1.18 times more return on investment than Sterling Capital. However, Us Small is 1.18 times more volatile than Sterling Capital Behavioral. It trades about 0.13 of its potential returns per unit of risk. Sterling Capital Behavioral is currently generating about 0.14 per unit of risk. If you would invest  4,285  in Us Small Cap on May 3, 2025 and sell it today you would earn a total of  420.00  from holding Us Small Cap or generate 9.8% return on investment over 90 days.

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

Us Small Cap  vs.  Sterling Capital Behavioral

Us Small Cap

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Us Small Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Us Small may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Sterling Capital Beh

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Behavioral are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Sterling Capital may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Us Small and Sterling Capital

The main advantage of trading using opposite Us Small and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Small 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 Us Small Cap and Sterling Capital Behavioral 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.