Correlation Between IShares Core and Capital Group
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 IShares Core and Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and Capital Group Global, you can compare the effects of market volatilities on IShares Core 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 IShares Core with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Capital Group.
Diversification Opportunities for IShares Core and Capital Group
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Capital is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Capital Group Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Global and IShares Core 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 iShares Core SP 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 Global has no effect on the direction of IShares Core i.e., IShares Core and Capital Group go up and down completely randomly.
Pair Corralation between IShares Core and Capital Group
Considering the 90-day investment horizon iShares Core SP is expected to generate 0.91 times more return on investment than Capital Group. However, iShares Core SP is 1.09 times less risky than Capital Group. It trades about 0.12 of its potential returns per unit of risk. Capital Group Global is currently generating about 0.09 per unit of risk. If you would invest 38,642 in iShares Core SP on November 19, 2024 and sell it today you would earn a total of 22,626 from holding iShares Core SP or generate 58.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. Capital Group Global
Performance |
| Timeline |
| iShares Core SP |
| Capital Group Global |
IShares Core and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Capital Group
The main advantage of trading using opposite IShares Core and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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.| IShares Core vs. iShares Core SP | IShares Core vs. iShares Core SP | IShares Core vs. iShares SP 500 | IShares Core vs. iShares Russell 2000 |
| Capital Group vs. Capital Group Growth | Capital Group vs. Capital Group Dividend | Capital Group vs. Capital Group International | Capital Group vs. Capital Group Core |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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