Correlation Between Capital Group and BlackRock ETF
Can any of the company-specific risk be diversified away by investing in both Capital Group and BlackRock ETF 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 BlackRock ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Group Municipal and BlackRock ETF Trust, you can compare the effects of market volatilities on Capital Group and BlackRock ETF 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 BlackRock ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Group and BlackRock ETF.
Diversification Opportunities for Capital Group and BlackRock ETF
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and BlackRock is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Capital Group Municipal and BlackRock ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock ETF Trust 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 Municipal are associated (or correlated) with BlackRock ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock ETF Trust has no effect on the direction of Capital Group i.e., Capital Group and BlackRock ETF go up and down completely randomly.
Pair Corralation between Capital Group and BlackRock ETF
Given the investment horizon of 90 days Capital Group Municipal is expected to generate 2.84 times more return on investment than BlackRock ETF. However, Capital Group is 2.84 times more volatile than BlackRock ETF Trust. It trades about 0.12 of its potential returns per unit of risk. BlackRock ETF Trust is currently generating about 0.18 per unit of risk. If you would invest 2,702 in Capital Group Municipal on August 30, 2024 and sell it today you would earn a total of 27.00 from holding Capital Group Municipal or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Group Municipal vs. BlackRock ETF Trust
Performance |
| Timeline |
| Capital Group Municipal |
| BlackRock ETF Trust |
Capital Group and BlackRock ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Group and BlackRock ETF
The main advantage of trading using opposite Capital Group and BlackRock ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Group position performs unexpectedly, BlackRock ETF 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 BlackRock ETF will offset losses from the drop in BlackRock ETF's long position.| Capital Group vs. Capital Group Multi Sector | Capital Group vs. Capital Group Short | Capital Group vs. Capital Group Global | Capital Group vs. Capital Group Dividend |
| BlackRock ETF vs. BlackRock ETF Trust | BlackRock ETF vs. Aris Water Solutions | BlackRock ETF vs. Pacer Cash Cows |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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