Correlation Between Xtrackers California and Capital Group
Can any of the company-specific risk be diversified away by investing in both Xtrackers California and Capital Group 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 Xtrackers California and Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers California Municipal and Capital Group Fixed, you can compare the effects of market volatilities on Xtrackers California and Capital Group 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 Xtrackers California with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers California and Capital Group.
Diversification Opportunities for Xtrackers California and Capital Group
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Xtrackers and Capital is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers California Municipal and Capital Group Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Fixed and Xtrackers California 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 Xtrackers California Municipal are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Fixed has no effect on the direction of Xtrackers California i.e., Xtrackers California and Capital Group go up and down completely randomly.
Pair Corralation between Xtrackers California and Capital Group
Allowing for the 90-day total investment horizon Xtrackers California is expected to generate 265.46 times less return on investment than Capital Group. But when comparing it to its historical volatility, Xtrackers California Municipal is 407.23 times less risky than Capital Group. It trades about 0.15 of its potential returns per unit of risk. Capital Group Fixed is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Capital Group Fixed on August 29, 2024 and sell it today you would earn a total of 2,579 from holding Capital Group Fixed or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 86.51% |
| Values | Daily Returns |
Xtrackers California Municipal vs. Capital Group Fixed
Performance |
| Timeline |
| Xtrackers California |
| Capital Group Fixed |
Xtrackers California and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers California and Capital Group
The main advantage of trading using opposite Xtrackers California and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers California position performs unexpectedly, Capital Group 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 Group will offset losses from the drop in Capital Group's long position.| Xtrackers California vs. IQ MacKay Municipal | Xtrackers California vs. IQ MacKay Municipal | Xtrackers California vs. ALPS Intermediate Municipal | Xtrackers California vs. MYMF |
| Capital Group vs. SSGA Active Trust | Capital Group vs. SPDR Nuveen Municipal | Capital Group vs. iShares Short Maturity | Capital Group vs. First Trust Flexible |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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