Correlation Between Capital Income and BTC Health
Can any of the company-specific risk be diversified away by investing in both Capital Income and BTC Health 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 BTC Health 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 BTC Health Limited, you can compare the effects of market volatilities on Capital Income and BTC Health 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 BTC Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and BTC Health.
Diversification Opportunities for Capital Income and BTC Health
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Capital and BTC is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and BTC Health Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTC Health Limited 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 BTC Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTC Health Limited has no effect on the direction of Capital Income i.e., Capital Income and BTC Health go up and down completely randomly.
Pair Corralation between Capital Income and BTC Health
Assuming the 90 days horizon Capital Income is expected to generate 11.52 times less return on investment than BTC Health. But when comparing it to its historical volatility, Capital Income Builder is 8.7 times less risky than BTC Health. It trades about 0.07 of its potential returns per unit of risk. BTC Health Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3.50 in BTC Health Limited on November 3, 2024 and sell it today you would earn a total of 2.00 from holding BTC Health Limited or generate 57.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Capital Income Builder vs. BTC Health Limited
Performance |
| Timeline |
| Capital Income Builder |
| BTC Health Limited |
Capital Income and BTC Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and BTC Health
The main advantage of trading using opposite Capital Income and BTC Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, BTC Health 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 BTC Health will offset losses from the drop in BTC Health's long position.| Capital Income vs. Blackrock Financial Institutions | Capital Income vs. Fidelity Advisor Financial | Capital Income vs. Blackstone Secured Lending | Capital Income vs. 1919 Financial Services |
| BTC Health vs. Aneka Tambang Tbk | BTC Health vs. BHP Group Limited | BTC Health vs. Rio Tinto | BTC Health vs. Macquarie Group Ltd |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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