Correlation Between Capital Group and Invesco FTSE
Can any of the company-specific risk be diversified away by investing in both Capital Group and Invesco FTSE 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 Group and Invesco FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Group International and Invesco FTSE RAFI, you can compare the effects of market volatilities on Capital Group and Invesco FTSE 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 Group with a short position of Invesco FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Group and Invesco FTSE.
Diversification Opportunities for Capital Group and Invesco FTSE
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Capital and Invesco is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Capital Group International and Invesco FTSE RAFI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco FTSE RAFI and Capital Group 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 Group International are associated (or correlated) with Invesco FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco FTSE RAFI has no effect on the direction of Capital Group i.e., Capital Group and Invesco FTSE go up and down completely randomly.
Pair Corralation between Capital Group and Invesco FTSE
Given the investment horizon of 90 days Capital Group International is expected to under-perform the Invesco FTSE. But the etf apears to be less risky and, when comparing its historical volatility, Capital Group International is 1.08 times less risky than Invesco FTSE. The etf trades about -0.06 of its potential returns per unit of risk. The Invesco FTSE RAFI is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 4,968 in Invesco FTSE RAFI on September 2, 2024 and sell it today you would lose (12.00) from holding Invesco FTSE RAFI or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Group International vs. Invesco FTSE RAFI
Performance |
| Timeline |
| Capital Group Intern |
| Invesco FTSE RAFI |
Capital Group and Invesco FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Group and Invesco FTSE
The main advantage of trading using opposite Capital Group and Invesco FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Group position performs unexpectedly, Invesco FTSE 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 Invesco FTSE will offset losses from the drop in Invesco FTSE's long position.| Capital Group vs. Invesco SP International | Capital Group vs. Invesco SP International | Capital Group vs. Invesco FTSE RAFI | Capital Group vs. Invesco SP Emerging |
| Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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