Correlation Between Capital Income and Stone Harbor
Can any of the company-specific risk be diversified away by investing in both Capital Income and Stone Harbor 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 Stone Harbor 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 Stone Harbor Emerging, you can compare the effects of market volatilities on Capital Income and Stone Harbor 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 Stone Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Stone Harbor.
Diversification Opportunities for Capital Income and Stone Harbor
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and Stone is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and Stone Harbor Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Harbor Emerging 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 Stone Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Harbor Emerging has no effect on the direction of Capital Income i.e., Capital Income and Stone Harbor go up and down completely randomly.
Pair Corralation between Capital Income and Stone Harbor
Assuming the 90 days horizon Capital Income Builder is expected to generate 1.66 times more return on investment than Stone Harbor. However, Capital Income is 1.66 times more volatile than Stone Harbor Emerging. It trades about 0.13 of its potential returns per unit of risk. Stone Harbor Emerging is currently generating about 0.16 per unit of risk. If you would invest 6,785 in Capital Income Builder on September 3, 2024 and sell it today you would earn a total of 547.00 from holding Capital Income Builder or generate 8.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Income Builder vs. Stone Harbor Emerging
Performance |
| Timeline |
| Capital Income Builder |
| Stone Harbor Emerging |
Capital Income and Stone Harbor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and Stone Harbor
The main advantage of trading using opposite Capital Income and Stone Harbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, Stone Harbor 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 Stone Harbor will offset losses from the drop in Stone Harbor's long position.| Capital Income vs. Tiaa Cref Real Estate | Capital Income vs. Columbia Real Estate | Capital Income vs. Jhancock Real Estate | Capital Income vs. Prudential Real Estate |
| Stone Harbor vs. Fidelity New Markets | Stone Harbor vs. Fidelity New Markets | Stone Harbor vs. Fidelity New Markets | Stone Harbor vs. Fidelity New Markets |
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.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |