Correlation Between Capital World and Pax Ellevate
Can any of the company-specific risk be diversified away by investing in both Capital World and Pax Ellevate 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 Ellevate 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 Ellevate Global, you can compare the effects of market volatilities on Capital World and Pax Ellevate 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 Ellevate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Pax Ellevate.
Diversification Opportunities for Capital World and Pax Ellevate
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capital and Pax is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Growth and Pax Ellevate Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Ellevate Global 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 Ellevate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Ellevate Global has no effect on the direction of Capital World i.e., Capital World and Pax Ellevate go up and down completely randomly.
Pair Corralation between Capital World and Pax Ellevate
Assuming the 90 days horizon Capital World Growth is expected to under-perform the Pax Ellevate. But the mutual fund apears to be less risky and, when comparing its historical volatility, Capital World Growth is 1.11 times less risky than Pax Ellevate. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Pax Ellevate Global is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,505 in Pax Ellevate Global on August 28, 2024 and sell it today you would earn a total of 45.00 from holding Pax Ellevate Global or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Capital World Growth vs. Pax Ellevate Global
Performance |
| Timeline |
| Capital World Growth |
| Pax Ellevate Global |
Capital World and Pax Ellevate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and Pax Ellevate
The main advantage of trading using opposite Capital World and Pax Ellevate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World position performs unexpectedly, Pax Ellevate 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 Ellevate will offset losses from the drop in Pax Ellevate's long position.| Capital World vs. Income Fund Of | Capital World vs. New World Fund | Capital World vs. American Mutual Fund | Capital World vs. American Mutual Fund |
| Pax Ellevate vs. Pax Ellevate Global | Pax Ellevate vs. Pax Small Cap | Pax Ellevate vs. Pax Global Environmental | Pax Ellevate vs. Access Capital Munity |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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