Correlation Between Doubleline Emerging and Capital World
Can any of the company-specific risk be diversified away by investing in both Doubleline Emerging and Capital World 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 Doubleline Emerging and Capital World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Doubleline Emerging Markets and Capital World Growth, you can compare the effects of market volatilities on Doubleline Emerging and Capital World 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 Doubleline Emerging with a short position of Capital World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doubleline Emerging and Capital World.
Diversification Opportunities for Doubleline Emerging and Capital World
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Doubleline and Capital is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Doubleline Emerging Markets and Capital World Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World Growth and Doubleline Emerging 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 Doubleline Emerging Markets are associated (or correlated) with Capital World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital World Growth has no effect on the direction of Doubleline Emerging i.e., Doubleline Emerging and Capital World go up and down completely randomly.
Pair Corralation between Doubleline Emerging and Capital World
Assuming the 90 days horizon Doubleline Emerging is expected to generate 3.15 times less return on investment than Capital World. But when comparing it to its historical volatility, Doubleline Emerging Markets is 1.97 times less risky than Capital World. It trades about 0.03 of its potential returns per unit of risk. Capital World Growth is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,967 in Capital World Growth on January 17, 2025 and sell it today you would earn a total of 1,123 from holding Capital World Growth or generate 22.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Doubleline Emerging Markets vs. Capital World Growth
Performance |
| Timeline |
| Doubleline Emerging |
| Capital World Growth |
Doubleline Emerging and Capital World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Doubleline Emerging and Capital World
The main advantage of trading using opposite Doubleline Emerging and Capital World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doubleline Emerging position performs unexpectedly, Capital World 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 Capital World will offset losses from the drop in Capital World's long position.The idea behind Doubleline Emerging Markets and Capital World Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Capital World vs. Old Westbury Short Term | Capital World vs. Short Intermediate Bond Fund | Capital World vs. Ultra Short Fixed Income | Capital World vs. Avantis Short Term Fixed |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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