Correlation Between Capital Income and IShares China
Can any of the company-specific risk be diversified away by investing in both Capital Income and IShares China 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 IShares China 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 iShares China CNY, you can compare the effects of market volatilities on Capital Income and IShares China 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 IShares China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and IShares China.
Diversification Opportunities for Capital Income and IShares China
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capital and IShares is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and iShares China CNY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares China CNY 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 IShares China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares China CNY has no effect on the direction of Capital Income i.e., Capital Income and IShares China go up and down completely randomly.
Pair Corralation between Capital Income and IShares China
Assuming the 90 days horizon Capital Income Builder is expected to generate 2.71 times more return on investment than IShares China. However, Capital Income is 2.71 times more volatile than iShares China CNY. It trades about 0.14 of its potential returns per unit of risk. iShares China CNY is currently generating about 0.12 per unit of risk. If you would invest 6,906 in Capital Income Builder on October 23, 2024 and sell it today you would earn a total of 89.00 from holding Capital Income Builder or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Income Builder vs. iShares China CNY
Performance |
| Timeline |
| Capital Income Builder |
| iShares China CNY |
Capital Income and IShares China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and IShares China
The main advantage of trading using opposite Capital Income and IShares China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, IShares China 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 IShares China will offset losses from the drop in IShares China's long position.| Capital Income vs. Legg Mason Partners | Capital Income vs. Artisan Developing World | Capital Income vs. Ab All Market | Capital Income vs. Oklahoma College Savings |
| IShares China vs. iShares III Public | IShares China vs. iShares Core MSCI | IShares China vs. iShares France Govt | IShares China vs. iShares Edge MSCI |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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