Correlation Between Capital Group and Wahed Dow
Can any of the company-specific risk be diversified away by investing in both Capital Group and Wahed Dow 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 Wahed Dow 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 Wahed Dow Jones, you can compare the effects of market volatilities on Capital Group and Wahed Dow 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 Wahed Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Group and Wahed Dow.
Diversification Opportunities for Capital Group and Wahed Dow
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Capital and Wahed is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Capital Group International and Wahed Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wahed Dow Jones 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 Wahed Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wahed Dow Jones has no effect on the direction of Capital Group i.e., Capital Group and Wahed Dow go up and down completely randomly.
Pair Corralation between Capital Group and Wahed Dow
Given the investment horizon of 90 days Capital Group is expected to generate 1.13 times less return on investment than Wahed Dow. But when comparing it to its historical volatility, Capital Group International is 1.07 times less risky than Wahed Dow. It trades about 0.04 of its potential returns per unit of risk. Wahed Dow Jones is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,987 in Wahed Dow Jones on August 23, 2024 and sell it today you would earn a total of 394.00 from holding Wahed Dow Jones or generate 19.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Group International vs. Wahed Dow Jones
Performance |
| Timeline |
| Capital Group Intern |
| Wahed Dow Jones |
Capital Group and Wahed Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Group and Wahed Dow
The main advantage of trading using opposite Capital Group and Wahed Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Group position performs unexpectedly, Wahed Dow 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 Wahed Dow will offset losses from the drop in Wahed Dow's long position.| Capital Group vs. Capital Group Dividend | Capital Group vs. Capital Group Global | Capital Group vs. Capital Group Growth | Capital Group vs. Capital Group Core |
| Wahed Dow vs. Invesco DWA Emerging | Wahed Dow vs. Invesco DWA Momentum | Wahed Dow vs. Invesco DWA SmallCap | Wahed Dow 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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