Correlation Between Sterling Capital and ProShares

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Can any of the company-specific risk be diversified away by investing in both Sterling Capital and ProShares 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 ProShares 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 ProShares SP 500, you can compare the effects of market volatilities on Sterling Capital and ProShares 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 ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and ProShares.

Diversification Opportunities for Sterling Capital and ProShares

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Sterling and ProShares is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Focus and ProShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares 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 ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP 500 has no effect on the direction of Sterling Capital i.e., Sterling Capital and ProShares go up and down completely randomly.

Pair Corralation between Sterling Capital and ProShares

Considering the 90-day investment horizon Sterling Capital Focus is expected to under-perform the ProShares. In addition to that, Sterling Capital is 1.28 times more volatile than ProShares SP 500. It trades about -0.33 of its total potential returns per unit of risk. ProShares SP 500 is currently generating about -0.07 per unit of volatility. If you would invest  9,856  in ProShares SP 500 on March 8, 2024 and sell it today you would lose (109.00) from holding ProShares SP 500 or give up 1.11% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Sterling Capital Focus  vs.  ProShares SP 500

 Performance 
       Timeline  
Sterling Capital Focus 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 unfluctuating performance in the last few months, the Etf's fundamental indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.
ProShares SP 500 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ProShares SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, ProShares is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Sterling Capital and ProShares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sterling Capital and ProShares

The main advantage of trading using opposite Sterling Capital and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital position performs unexpectedly, ProShares 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 ProShares will offset losses from the drop in ProShares' long position.
The idea behind Sterling Capital Focus and ProShares 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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