Correlation Between Capital Income and KABE Group
Can any of the company-specific risk be diversified away by investing in both Capital Income and KABE Group 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 KABE Group 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 KABE Group AB, you can compare the effects of market volatilities on Capital Income and KABE Group 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 KABE Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and KABE Group.
Diversification Opportunities for Capital Income and KABE Group
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Capital and KABE is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and KABE Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KABE Group AB 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 KABE Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KABE Group AB has no effect on the direction of Capital Income i.e., Capital Income and KABE Group go up and down completely randomly.
Pair Corralation between Capital Income and KABE Group
Assuming the 90 days horizon Capital Income is expected to generate 1.41 times less return on investment than KABE Group. But when comparing it to its historical volatility, Capital Income Builder is 2.12 times less risky than KABE Group. It trades about 0.24 of its potential returns per unit of risk. KABE Group AB is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 29,800 in KABE Group AB on October 24, 2024 and sell it today you would earn a total of 900.00 from holding KABE Group AB or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 88.89% |
| Values | Daily Returns |
Capital Income Builder vs. KABE Group AB
Performance |
| Timeline |
| Capital Income Builder |
| KABE Group AB |
Capital Income and KABE Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and KABE Group
The main advantage of trading using opposite Capital Income and KABE Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, KABE Group 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 KABE Group will offset losses from the drop in KABE Group'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 |
| KABE Group vs. Byggmax Group AB | KABE Group vs. Svedbergs i Dalstorp | KABE Group vs. Inwido AB | KABE Group vs. New Wave Group |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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