Correlation Between International Investors and Capital World
Can any of the company-specific risk be diversified away by investing in both International Investors 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 International Investors and Capital World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Investors Gold and Capital World Bond, you can compare the effects of market volatilities on International Investors 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 International Investors with a short position of Capital World. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Investors and Capital World.
Diversification Opportunities for International Investors and Capital World
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between International and Capital is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding International Investors Gold and Capital World Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World Bond and International Investors 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 International Investors Gold 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 Bond has no effect on the direction of International Investors i.e., International Investors and Capital World go up and down completely randomly.
Pair Corralation between International Investors and Capital World
Assuming the 90 days horizon International Investors Gold is expected to generate 4.64 times more return on investment than Capital World. However, International Investors is 4.64 times more volatile than Capital World Bond. It trades about 0.07 of its potential returns per unit of risk. Capital World Bond is currently generating about 0.03 per unit of risk. If you would invest 918.00 in International Investors Gold on September 5, 2024 and sell it today you would earn a total of 298.00 from holding International Investors Gold or generate 32.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Investors Gold vs. Capital World Bond
Performance |
| Timeline |
| International Investors |
| Capital World Bond |
International Investors and Capital World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Investors and Capital World
The main advantage of trading using opposite International Investors and Capital World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Investors 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.| International Investors vs. Eic Value Fund | International Investors vs. Issachar Fund Class | International Investors vs. Ab Small Cap | International Investors vs. Vanguard Windsor Fund |
| Capital World vs. Income Fund Of | Capital World vs. New World Fund | Capital World vs. American Mutual Fund | Capital World vs. American Mutual Fund |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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