Correlation Between Capital Income and Pacer Lunt
Can any of the company-specific risk be diversified away by investing in both Capital Income and Pacer Lunt 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 Pacer Lunt 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 Pacer Lunt Large, you can compare the effects of market volatilities on Capital Income and Pacer Lunt 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 Pacer Lunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Pacer Lunt.
Diversification Opportunities for Capital Income and Pacer Lunt
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and Pacer is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and Pacer Lunt Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Lunt Large 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 Pacer Lunt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Lunt Large has no effect on the direction of Capital Income i.e., Capital Income and Pacer Lunt go up and down completely randomly.
Pair Corralation between Capital Income and Pacer Lunt
Assuming the 90 days horizon Capital Income is expected to generate 1.35 times less return on investment than Pacer Lunt. But when comparing it to its historical volatility, Capital Income Builder is 1.65 times less risky than Pacer Lunt. It trades about 0.26 of its potential returns per unit of risk. Pacer Lunt Large is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 4,909 in Pacer Lunt Large on November 3, 2024 and sell it today you would earn a total of 187.00 from holding Pacer Lunt Large or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Capital Income Builder vs. Pacer Lunt Large
Performance |
| Timeline |
| Capital Income Builder |
| Pacer Lunt Large |
Capital Income and Pacer Lunt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and Pacer Lunt
The main advantage of trading using opposite Capital Income and Pacer Lunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, Pacer Lunt 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 Pacer Lunt will offset losses from the drop in Pacer Lunt'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 |
| Pacer Lunt vs. Pacer Lunt Large | Pacer Lunt vs. Pacer Lunt MidCap | Pacer Lunt vs. Pacer Trendpilot Bond | Pacer Lunt vs. Pacer Small Cap |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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