Correlation Between Capital World and Sit Esg
Can any of the company-specific risk be diversified away by investing in both Capital World and Sit Esg 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 Sit Esg 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 Sit Esg Growth, you can compare the effects of market volatilities on Capital World and Sit Esg 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 Sit Esg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Sit Esg.
Diversification Opportunities for Capital World and Sit Esg
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capital and Sit is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Growth and Sit Esg Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Esg Growth 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 Sit Esg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Esg Growth has no effect on the direction of Capital World i.e., Capital World and Sit Esg go up and down completely randomly.
Pair Corralation between Capital World and Sit Esg
Assuming the 90 days horizon Capital World Growth is expected to under-perform the Sit Esg. But the mutual fund apears to be less risky and, when comparing its historical volatility, Capital World Growth is 1.14 times less risky than Sit Esg. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Sit Esg Growth is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,240 in Sit Esg Growth on August 26, 2024 and sell it today you would earn a total of 20.00 from holding Sit Esg Growth or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital World Growth vs. Sit Esg Growth
Performance |
| Timeline |
| Capital World Growth |
| Sit Esg Growth |
Capital World and Sit Esg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and Sit Esg
The main advantage of trading using opposite Capital World and Sit Esg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World position performs unexpectedly, Sit Esg 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 Sit Esg will offset losses from the drop in Sit Esg's long position.| Capital World vs. Old Westbury Large | Capital World vs. Aqr Large Cap | Capital World vs. Quantitative U S | Capital World vs. Goldman Sachs Large |
| Sit Esg vs. Ab Bond Inflation | Sit Esg vs. Western Asset Inflation | Sit Esg vs. Loomis Sayles Inflation | Sit Esg vs. Short Duration Inflation |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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