Correlation Between Capital Income and BW LPG
Can any of the company-specific risk be diversified away by investing in both Capital Income and BW LPG 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 BW LPG 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 BW LPG, you can compare the effects of market volatilities on Capital Income and BW LPG 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 BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and BW LPG.
Diversification Opportunities for Capital Income and BW LPG
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Capital and BWLPG is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and BW LPG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW LPG 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 BW LPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW LPG has no effect on the direction of Capital Income i.e., Capital Income and BW LPG go up and down completely randomly.
Pair Corralation between Capital Income and BW LPG
Assuming the 90 days horizon Capital Income is expected to generate 2.72 times less return on investment than BW LPG. But when comparing it to its historical volatility, Capital Income Builder is 5.18 times less risky than BW LPG. It trades about 0.23 of its potential returns per unit of risk. BW LPG is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 13,440 in BW LPG on November 4, 2024 and sell it today you would earn a total of 930.00 from holding BW LPG or generate 6.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Capital Income Builder vs. BW LPG
Performance |
| Timeline |
| Capital Income Builder |
| BW LPG |
Capital Income and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and BW LPG
The main advantage of trading using opposite Capital Income and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, BW LPG 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 BW LPG will offset losses from the drop in BW LPG'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 |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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