Correlation Between Capital Income and Sika AG
Can any of the company-specific risk be diversified away by investing in both Capital Income and Sika AG 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 Sika AG 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 Sika AG, you can compare the effects of market volatilities on Capital Income and Sika AG 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 Sika AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Sika AG.
Diversification Opportunities for Capital Income and Sika AG
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and Sika is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and Sika AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sika AG 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 Sika AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sika AG has no effect on the direction of Capital Income i.e., Capital Income and Sika AG go up and down completely randomly.
Pair Corralation between Capital Income and Sika AG
Assuming the 90 days horizon Capital Income is expected to generate 2.95 times less return on investment than Sika AG. But when comparing it to its historical volatility, Capital Income Builder is 1.24 times less risky than Sika AG. It trades about 0.26 of its potential returns per unit of risk. Sika AG is currently generating about 0.61 of returns per unit of risk over similar time horizon. If you would invest 21,290 in Sika AG on November 3, 2024 and sell it today you would earn a total of 2,040 from holding Sika AG or generate 9.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Capital Income Builder vs. Sika AG
Performance |
| Timeline |
| Capital Income Builder |
| Sika AG |
Capital Income and Sika AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and Sika AG
The main advantage of trading using opposite Capital Income and Sika AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, Sika AG 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 Sika AG will offset losses from the drop in Sika AG'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 |
| Sika AG vs. Lonza Group AG | Sika AG vs. Givaudan SA | Sika AG vs. Geberit AG | Sika AG vs. Partners Group Holding |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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