Correlation Between Capital World and Pax Global
Can any of the company-specific risk be diversified away by investing in both Capital World and Pax Global 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 Pax Global 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 Pax Global Environmental, you can compare the effects of market volatilities on Capital World and Pax Global 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 Pax Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Pax Global.
Diversification Opportunities for Capital World and Pax Global
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capital and Pax is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Growth and Pax Global Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Global Environmental 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 Pax Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Global Environmental has no effect on the direction of Capital World i.e., Capital World and Pax Global go up and down completely randomly.
Pair Corralation between Capital World and Pax Global
Assuming the 90 days horizon Capital World Growth is expected to generate 0.78 times more return on investment than Pax Global. However, Capital World Growth is 1.28 times less risky than Pax Global. It trades about -0.07 of its potential returns per unit of risk. Pax Global Environmental is currently generating about -0.1 per unit of risk. If you would invest 6,845 in Capital World Growth on August 25, 2024 and sell it today you would lose (74.00) from holding Capital World Growth or give up 1.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital World Growth vs. Pax Global Environmental
Performance |
| Timeline |
| Capital World Growth |
| Pax Global Environmental |
Capital World and Pax Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and Pax Global
The main advantage of trading using opposite Capital World and Pax Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World position performs unexpectedly, Pax Global 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 Pax Global will offset losses from the drop in Pax Global's long position.| Capital World vs. Capital Growth Fund | Capital World vs. Capital Group Equity | Capital World vs. Capital World Growth | Capital World vs. Capital World Growth |
| Pax Global vs. T Rowe Price | Pax Global vs. Msif Emerging Markets | Pax Global vs. Delaware Small Cap | Pax Global vs. Fidelity Otc Portfolio |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |