Correlation Between Sterling Capital and IShares SP

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

By analyzing existing cross correlation between Sterling Capital Focus and iShares SP 500, you can compare the effects of market volatilities on Sterling Capital and IShares SP 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 IShares SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and IShares SP.

Diversification Opportunities for Sterling Capital and IShares SP

0.18

Correlation Coefficient

Sterling Capital  IShares SP

Average diversification

The 3 months correlation between Sterling and IShares is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Focus and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 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 Focus are associated (or correlated) with IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of Sterling Capital i.e., Sterling Capital and IShares SP go up and down completely randomly.

Pair Corralation between Sterling Capital and IShares SP

Considering the 90-day investment horizon Sterling Capital Focus is expected to under-perform the IShares SP. In addition to that, Sterling Capital is 1.46 times more volatile than iShares SP 500. It trades about -0.17 of its total potential returns per unit of risk. iShares SP 500 is currently generating about 0.05 per unit of volatility. If you would invest  18,216  in iShares SP 500 on March 9, 2024 and sell it today you would earn a total of  114.00  from holding iShares SP 500 or generate 0.63% return on investment over 90 days.

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

Sterling Capital Focus  vs.  iShares SP 500

Sterling Capital Focus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sterling Capital Focus has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

iShares SP 500

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SP 500 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IShares SP is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sterling Capital and IShares SP

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

The idea behind Sterling Capital Focus and iShares SP 500 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.