Correlation Between DSJA and Capital Group
Can any of the company-specific risk be diversified away by investing in both DSJA and Capital Group 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 DSJA and Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DSJA and Capital Group Core, you can compare the effects of market volatilities on DSJA and Capital Group 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 DSJA with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of DSJA and Capital Group.
Diversification Opportunities for DSJA and Capital Group
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DSJA and Capital is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding DSJA and Capital Group Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Core and DSJA 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 DSJA are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Core has no effect on the direction of DSJA i.e., DSJA and Capital Group go up and down completely randomly.
Pair Corralation between DSJA and Capital Group
If you would invest 2,246 in Capital Group Core on August 28, 2024 and sell it today you would earn a total of 12.00 from holding Capital Group Core or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
DSJA vs. Capital Group Core
Performance |
| Timeline |
| DSJA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Capital Group Core |
DSJA and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DSJA and Capital Group
The main advantage of trading using opposite DSJA and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSJA position performs unexpectedly, Capital Group 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 Group will offset losses from the drop in Capital Group's long position.The idea behind DSJA and Capital Group Core 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 Group vs. Capital Group Dividend | Capital Group vs. Capital Group Core | Capital Group vs. Capital Group Growth | Capital Group vs. Capital Group Global |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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