Correlation Between Capital Income and Wilmington Multi-manager
Can any of the company-specific risk be diversified away by investing in both Capital Income and Wilmington Multi-manager 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 Wilmington Multi-manager 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 Wilmington Multi Manager Real, you can compare the effects of market volatilities on Capital Income and Wilmington Multi-manager 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 Wilmington Multi-manager. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Wilmington Multi-manager.
Diversification Opportunities for Capital Income and Wilmington Multi-manager
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capital and Wilmington is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and Wilmington Multi Manager Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Multi-manager 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 Wilmington Multi-manager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Multi-manager has no effect on the direction of Capital Income i.e., Capital Income and Wilmington Multi-manager go up and down completely randomly.
Pair Corralation between Capital Income and Wilmington Multi-manager
Assuming the 90 days horizon Capital Income Builder is expected to generate 0.83 times more return on investment than Wilmington Multi-manager. However, Capital Income Builder is 1.21 times less risky than Wilmington Multi-manager. It trades about 0.07 of its potential returns per unit of risk. Wilmington Multi Manager Real is currently generating about 0.03 per unit of risk. If you would invest 6,090 in Capital Income Builder on November 9, 2024 and sell it today you would earn a total of 1,096 from holding Capital Income Builder or generate 18.0% 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. Wilmington Multi Manager Real
Performance |
| Timeline |
| Capital Income Builder |
| Wilmington Multi-manager |
Capital Income and Wilmington Multi-manager Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and Wilmington Multi-manager
The main advantage of trading using opposite Capital Income and Wilmington Multi-manager positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, Wilmington Multi-manager 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 Wilmington Multi-manager will offset losses from the drop in Wilmington Multi-manager's long position.| Capital Income vs. Capital Growth Fund | Capital Income vs. Capital Group Equity | Capital Income vs. Capital World Growth | Capital Income vs. Capital World Growth |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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