Correlation Between Capital Income and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both Capital Income and XLMedia PLC 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 XLMedia PLC 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 XLMedia PLC, you can compare the effects of market volatilities on Capital Income and XLMedia PLC 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 XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and XLMedia PLC.
Diversification Opportunities for Capital Income and XLMedia PLC
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capital and XLMedia is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Capital Income i.e., Capital Income and XLMedia PLC go up and down completely randomly.
Pair Corralation between Capital Income and XLMedia PLC
Assuming the 90 days horizon Capital Income Builder is expected to generate 0.09 times more return on investment than XLMedia PLC. However, Capital Income Builder is 11.27 times less risky than XLMedia PLC. It trades about -0.05 of its potential returns per unit of risk. XLMedia PLC is currently generating about -0.01 per unit of risk. If you would invest 7,214 in Capital Income Builder on November 3, 2024 and sell it today you would lose (115.00) from holding Capital Income Builder or give up 1.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.12% |
| Values | Daily Returns |
Capital Income Builder vs. XLMedia PLC
Performance |
| Timeline |
| Capital Income Builder |
| XLMedia PLC |
Capital Income and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and XLMedia PLC
The main advantage of trading using opposite Capital Income and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, XLMedia PLC 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 XLMedia PLC will offset losses from the drop in XLMedia PLC'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 |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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