Correlation Between Capital Income and Performance Trust
Can any of the company-specific risk be diversified away by investing in both Capital Income and Performance Trust 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 Performance Trust 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 Performance Trust Municipal, you can compare the effects of market volatilities on Capital Income and Performance Trust 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 Performance Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Performance Trust.
Diversification Opportunities for Capital Income and Performance Trust
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capital and Performance is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and Performance Trust Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Trust 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 Performance Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Trust has no effect on the direction of Capital Income i.e., Capital Income and Performance Trust go up and down completely randomly.
Pair Corralation between Capital Income and Performance Trust
Assuming the 90 days horizon Capital Income Builder is expected to generate 2.12 times more return on investment than Performance Trust. However, Capital Income is 2.12 times more volatile than Performance Trust Municipal. It trades about 0.26 of its potential returns per unit of risk. Performance Trust Municipal is currently generating about -0.04 per unit of risk. If you would invest 6,893 in Capital Income Builder on November 3, 2024 and sell it today you would earn a total of 206.00 from holding Capital Income Builder or generate 2.99% 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. Performance Trust Municipal
Performance |
| Timeline |
| Capital Income Builder |
| Performance Trust |
Capital Income and Performance Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and Performance Trust
The main advantage of trading using opposite Capital Income and Performance Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, Performance Trust 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 Performance Trust will offset losses from the drop in Performance Trust'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 |
| Performance Trust vs. Performance Trust Strategic | Performance Trust vs. Performance Trust Municipal | Performance Trust vs. Sierra Strategic Income | Performance Trust vs. Nuveen High Yield |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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