Correlation Between EverCommerce and Sterling Check

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

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

Diversification Opportunities for EverCommerce and Sterling Check

0.46

Correlation Coefficient

EverCommerce  Sterling Check

Very weak diversification

The 3 months correlation between EverCommerce and Sterling is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding EverCommerce and Sterling Check Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Check Corp and EverCommerce 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 EverCommerce are associated (or correlated) with Sterling Check. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Check Corp has no effect on the direction of EverCommerce i.e., EverCommerce and Sterling Check go up and down completely randomly.

Pair Corralation between EverCommerce and Sterling Check

Given the investment horizon of 90 days EverCommerce is expected to generate 1.14 times less return on investment than Sterling Check. But when comparing it to its historical volatility, EverCommerce is 1.04 times less risky than Sterling Check. It trades about 0.08 of its potential returns per unit of risk. Sterling Check Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,081  in Sterling Check Corp on August 9, 2024 and sell it today you would earn a total of  593.00  from holding Sterling Check Corp or generate 54.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

EverCommerce  vs.  Sterling Check Corp

EverCommerce

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EverCommerce are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, EverCommerce displayed solid returns over the last few months and may actually be approaching a breakup point.

Sterling Check Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Check Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Sterling Check may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with EverCommerce and Sterling Check

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

The idea behind EverCommerce and Sterling Check Corp 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.