Correlation Between Sterling Capital and Perritt Microcap

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

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

Diversification Opportunities for Sterling Capital and Perritt Microcap

0.95

Correlation Coefficient

Sterling Capital  Perritt Microcap

Almost no diversification

The 3 months correlation between Sterling and Perritt is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Stratton and Perritt Microcap Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perritt Microcap Opp 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 Stratton are associated (or correlated) with Perritt Microcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perritt Microcap Opp has no effect on the direction of Sterling Capital i.e., Sterling Capital and Perritt Microcap go up and down completely randomly.

Pair Corralation between Sterling Capital and Perritt Microcap

Assuming the 90 days horizon Sterling Capital is expected to generate 1.38 times less return on investment than Perritt Microcap. But when comparing it to its historical volatility, Sterling Capital Stratton is 1.07 times less risky than Perritt Microcap. It trades about 0.16 of its potential returns per unit of risk. Perritt Microcap Opportunities is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,069  in Perritt Microcap Opportunities on May 4, 2025 and sell it today you would earn a total of  302.00  from holding Perritt Microcap Opportunities or generate 14.6% return on investment over 90 days.

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

Sterling Capital Stratton  vs.  Perritt Microcap Opportunities

Sterling Capital Stratton

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sterling Capital Stratton are ranked lower than 12 (%) 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.

Perritt Microcap Opp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Perritt Microcap Opportunities are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Perritt Microcap showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sterling Capital and Perritt Microcap

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

The idea behind Sterling Capital Stratton and Perritt Microcap Opportunities 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.