Correlation Between Capital Income and Carrefour
Can any of the company-specific risk be diversified away by investing in both Capital Income and Carrefour 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 Carrefour 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 Carrefour SA, you can compare the effects of market volatilities on Capital Income and Carrefour 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 Carrefour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Carrefour.
Diversification Opportunities for Capital Income and Carrefour
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capital and Carrefour is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and Carrefour SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrefour SA 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 Carrefour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrefour SA has no effect on the direction of Capital Income i.e., Capital Income and Carrefour go up and down completely randomly.
Pair Corralation between Capital Income and Carrefour
Assuming the 90 days horizon Capital Income is expected to generate 1.79 times less return on investment than Carrefour. But when comparing it to its historical volatility, Capital Income Builder is 3.32 times less risky than Carrefour. It trades about 0.24 of its potential returns per unit of risk. Carrefour SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,362 in Carrefour SA on October 24, 2024 and sell it today you would earn a total of 57.00 from holding Carrefour SA or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Income Builder vs. Carrefour SA
Performance |
| Timeline |
| Capital Income Builder |
| Carrefour SA |
Capital Income and Carrefour Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and Carrefour
The main advantage of trading using opposite Capital Income and Carrefour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, Carrefour 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 Carrefour will offset losses from the drop in Carrefour's long position.| Capital Income vs. Old Westbury Municipal | Capital Income vs. Lord Abbett Intermediate | Capital Income vs. Blackrock Pa Muni | Capital Income vs. Inverse Government Long |
| Carrefour vs. J Sainsbury plc | Carrefour vs. Om Holdings International | Carrefour vs. Carrefour SA PK | Carrefour vs. Kesko Oyj ADR |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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