Correlation Between Capital Income and Les Hotels
Can any of the company-specific risk be diversified away by investing in both Capital Income and Les Hotels 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 Les Hotels 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 Les Hotels Bav, you can compare the effects of market volatilities on Capital Income and Les Hotels 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 Les Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Les Hotels.
Diversification Opportunities for Capital Income and Les Hotels
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capital and Les is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and Les Hotels Bav in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Les Hotels Bav 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 Les Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Les Hotels Bav has no effect on the direction of Capital Income i.e., Capital Income and Les Hotels go up and down completely randomly.
Pair Corralation between Capital Income and Les Hotels
Assuming the 90 days horizon Capital Income is expected to generate 1.01 times less return on investment than Les Hotels. But when comparing it to its historical volatility, Capital Income Builder is 6.13 times less risky than Les Hotels. It trades about 0.26 of its potential returns per unit of risk. Les Hotels Bav is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7,200 in Les Hotels Bav on November 3, 2024 and sell it today you would earn a total of 150.00 from holding Les Hotels Bav or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Capital Income Builder vs. Les Hotels Bav
Performance |
| Timeline |
| Capital Income Builder |
| Les Hotels Bav |
Capital Income and Les Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and Les Hotels
The main advantage of trading using opposite Capital Income and Les Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, Les Hotels 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 Les Hotels will offset losses from the drop in Les Hotels' 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 |
| Les Hotels vs. Delfingen | Les Hotels vs. Burelle SA | Les Hotels vs. Groupe JAJ | Les Hotels vs. Piscines Desjoyaux SA |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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