Correlation Between Capital Income and Fluent
Can any of the company-specific risk be diversified away by investing in both Capital Income and Fluent 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 Fluent 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 Fluent Inc, you can compare the effects of market volatilities on Capital Income and Fluent 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 Fluent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Fluent.
Diversification Opportunities for Capital Income and Fluent
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capital and Fluent is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and Fluent Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluent Inc 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 Fluent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluent Inc has no effect on the direction of Capital Income i.e., Capital Income and Fluent go up and down completely randomly.
Pair Corralation between Capital Income and Fluent
Assuming the 90 days horizon Capital Income Builder is expected to generate 0.2 times more return on investment than Fluent. However, Capital Income Builder is 4.95 times less risky than Fluent. It trades about 0.28 of its potential returns per unit of risk. Fluent Inc is currently generating about -0.02 per unit of risk. If you would invest 7,082 in Capital Income Builder on November 27, 2024 and sell it today you would earn a total of 163.00 from holding Capital Income Builder or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Income Builder vs. Fluent Inc
Performance |
| Timeline |
| Capital Income Builder |
| Fluent Inc |
Capital Income and Fluent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and Fluent
The main advantage of trading using opposite Capital Income and Fluent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, Fluent 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 Fluent will offset losses from the drop in Fluent's long position.| Capital Income vs. Goldman Sachs Small | Capital Income vs. Ashmore Emerging Markets | Capital Income vs. Transamerica International Small | Capital Income vs. Franklin Small Cap |
| Fluent vs. Marchex | Fluent vs. Dolphin Entertainment | Fluent vs. Beyond Commerce | Fluent vs. MGO Global Common |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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