Correlation Between Capital Group and Renaissance International
Can any of the company-specific risk be diversified away by investing in both Capital Group and Renaissance International 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 Renaissance International 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 Renaissance International IPO, you can compare the effects of market volatilities on Capital Group and Renaissance International 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 Renaissance International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Group and Renaissance International.
Diversification Opportunities for Capital Group and Renaissance International
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and Renaissance is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Capital Group International and Renaissance International IPO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renaissance International 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 Renaissance International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renaissance International has no effect on the direction of Capital Group i.e., Capital Group and Renaissance International go up and down completely randomly.
Pair Corralation between Capital Group and Renaissance International
Given the investment horizon of 90 days Capital Group International is expected to generate 1.09 times more return on investment than Renaissance International. However, Capital Group is 1.09 times more volatile than Renaissance International IPO. It trades about -0.11 of its potential returns per unit of risk. Renaissance International IPO is currently generating about -0.12 per unit of risk. If you would invest 2,633 in Capital Group International on August 30, 2024 and sell it today you would lose (55.00) from holding Capital Group International or give up 2.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Group International vs. Renaissance International IPO
Performance |
| Timeline |
| Capital Group Intern |
| Renaissance International |
Capital Group and Renaissance International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Group and Renaissance International
The main advantage of trading using opposite Capital Group and Renaissance International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Group position performs unexpectedly, Renaissance International 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 Renaissance International will offset losses from the drop in Renaissance International's long position.| Capital Group vs. Stance Equity ESG | Capital Group vs. Aquagold International | Capital Group vs. Morningstar Unconstrained Allocation | Capital Group vs. Thrivent 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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