Correlation Between VanEck Inflation and Capital Group
Can any of the company-specific risk be diversified away by investing in both VanEck Inflation 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 VanEck Inflation and Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Inflation Allocation and Capital Group Core, you can compare the effects of market volatilities on VanEck Inflation 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 VanEck Inflation with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Inflation and Capital Group.
Diversification Opportunities for VanEck Inflation and Capital Group
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VanEck and Capital is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Inflation Allocation 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 VanEck Inflation 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 VanEck Inflation Allocation 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 VanEck Inflation i.e., VanEck Inflation and Capital Group go up and down completely randomly.
Pair Corralation between VanEck Inflation and Capital Group
Given the investment horizon of 90 days VanEck Inflation is expected to generate 1.38 times less return on investment than Capital Group. In addition to that, VanEck Inflation is 1.34 times more volatile than Capital Group Core. It trades about 0.08 of its total potential returns per unit of risk. Capital Group Core is currently generating about 0.15 per unit of volatility. If you would invest 2,458 in Capital Group Core on September 1, 2024 and sell it today you would earn a total of 738.00 from holding Capital Group Core or generate 30.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 79.84% |
| Values | Daily Returns |
VanEck Inflation Allocation vs. Capital Group Core
Performance |
| Timeline |
| VanEck Inflation All |
| Capital Group Core |
VanEck Inflation and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Inflation and Capital Group
The main advantage of trading using opposite VanEck Inflation and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Inflation 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.| VanEck Inflation vs. iShares Core Growth | VanEck Inflation vs. ClearShares OCIO ETF | VanEck Inflation vs. Collaborative Investment Series | VanEck Inflation vs. Northern Lights |
| Capital Group vs. EA Series Trust | Capital Group vs. Northern Lights | Capital Group vs. Northern Lights | Capital Group vs. Northern Lights |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |