Correlation Between Capital World and Bond Fund
Can any of the company-specific risk be diversified away by investing in both Capital World and Bond Fund 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 Capital World and Bond Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital World Growth and Bond Fund Of, you can compare the effects of market volatilities on Capital World and Bond Fund 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 Capital World with a short position of Bond Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Bond Fund.
Diversification Opportunities for Capital World and Bond Fund
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capital and Bond is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Growth and Bond Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bond Fund and Capital World 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 Capital World Growth are associated (or correlated) with Bond Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bond Fund has no effect on the direction of Capital World i.e., Capital World and Bond Fund go up and down completely randomly.
Pair Corralation between Capital World and Bond Fund
Assuming the 90 days horizon Capital World Growth is expected to generate 1.7 times more return on investment than Bond Fund. However, Capital World is 1.7 times more volatile than Bond Fund Of. It trades about 0.17 of its potential returns per unit of risk. Bond Fund Of is currently generating about 0.08 per unit of risk. If you would invest 6,637 in Capital World Growth on September 1, 2024 and sell it today you would earn a total of 148.00 from holding Capital World Growth or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital World Growth vs. Bond Fund Of
Performance |
| Timeline |
| Capital World Growth |
| Bond Fund |
Capital World and Bond Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and Bond Fund
The main advantage of trading using opposite Capital World and Bond Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World position performs unexpectedly, Bond Fund 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 Bond Fund will offset losses from the drop in Bond Fund's long position.| Capital World vs. Dreyfus Government Cash | Capital World vs. Lord Abbett Government | Capital World vs. Ab Government Exchange | Capital World vs. Fidelity Series Government |
| Bond Fund vs. American High Income | Bond Fund vs. Europacific Growth Fund | Bond Fund vs. Capital World Bond | Bond Fund vs. Growth Fund Of |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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