Correlation Between Amcap Fund and Capital Income
Can any of the company-specific risk be diversified away by investing in both Amcap Fund and Capital Income 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 Amcap Fund and Capital Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amcap Fund Class and Capital Income Builder, you can compare the effects of market volatilities on Amcap Fund and Capital Income 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 Amcap Fund with a short position of Capital Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amcap Fund and Capital Income.
Diversification Opportunities for Amcap Fund and Capital Income
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amcap and Capital is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Amcap Fund Class and Capital Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Income Builder and Amcap Fund 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 Amcap Fund Class are associated (or correlated) with Capital Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Income Builder has no effect on the direction of Amcap Fund i.e., Amcap Fund and Capital Income go up and down completely randomly.
Pair Corralation between Amcap Fund and Capital Income
Assuming the 90 days horizon Amcap Fund Class is expected to generate 2.03 times more return on investment than Capital Income. However, Amcap Fund is 2.03 times more volatile than Capital Income Builder. It trades about 0.03 of its potential returns per unit of risk. Capital Income Builder is currently generating about 0.0 per unit of risk. If you would invest 3,420 in Amcap Fund Class on November 2, 2024 and sell it today you would earn a total of 114.00 from holding Amcap Fund Class or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amcap Fund Class vs. Capital Income Builder
Performance |
| Timeline |
| Amcap Fund Class |
| Capital Income Builder |
Amcap Fund and Capital Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amcap Fund and Capital Income
The main advantage of trading using opposite Amcap Fund and Capital Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amcap Fund position performs unexpectedly, Capital Income 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 Capital Income will offset losses from the drop in Capital Income's long position.| Amcap Fund vs. Tiaa Cref Real Estate | Amcap Fund vs. Neuberger Berman Real | Amcap Fund vs. Short Real Estate | Amcap Fund vs. Vy Clarion Real |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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