Correlation Between Capital Income and SOL IHS
Can any of the company-specific risk be diversified away by investing in both Capital Income and SOL IHS 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 Capital Income and SOL IHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Income Builder and SOL IHS Markit, you can compare the effects of market volatilities on Capital Income and SOL IHS 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 Capital Income with a short position of SOL IHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and SOL IHS.
Diversification Opportunities for Capital Income and SOL IHS
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capital and SOL is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and SOL IHS Markit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOL IHS Markit and Capital Income 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 Capital Income Builder are associated (or correlated) with SOL IHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOL IHS Markit has no effect on the direction of Capital Income i.e., Capital Income and SOL IHS go up and down completely randomly.
Pair Corralation between Capital Income and SOL IHS
Assuming the 90 days horizon Capital Income is expected to generate 1.5 times less return on investment than SOL IHS. But when comparing it to its historical volatility, Capital Income Builder is 3.24 times less risky than SOL IHS. It trades about 0.26 of its potential returns per unit of risk. SOL IHS Markit is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,223,500 in SOL IHS Markit on November 3, 2024 and sell it today you would earn a total of 47,000 from holding SOL IHS Markit or generate 3.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Capital Income Builder vs. SOL IHS Markit
Performance |
| Timeline |
| Capital Income Builder |
| SOL IHS Markit |
Capital Income and SOL IHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and SOL IHS
The main advantage of trading using opposite Capital Income and SOL IHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, SOL IHS 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 SOL IHS will offset losses from the drop in SOL IHS's long position.| Capital Income vs. Dws Global Macro | Capital Income vs. Rbb Fund | Capital Income vs. Kinetics Global Fund | Capital Income vs. Ms Global Fixed |
| SOL IHS vs. 453950 | SOL IHS vs. Busan Industrial Co | SOL IHS vs. Busan Ind | SOL IHS vs. Mirae Asset Daewoo |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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