Correlation Between Saat Moderate and Capital World
Can any of the company-specific risk be diversified away by investing in both Saat Moderate and Capital World 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 Saat Moderate and Capital World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saat Moderate Strategy and Capital World Bond, you can compare the effects of market volatilities on Saat Moderate and Capital World 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 Saat Moderate with a short position of Capital World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saat Moderate and Capital World.
Diversification Opportunities for Saat Moderate and Capital World
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Saat and Capital is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Saat Moderate Strategy and Capital World Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World Bond and Saat Moderate 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 Saat Moderate Strategy are associated (or correlated) with Capital World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital World Bond has no effect on the direction of Saat Moderate i.e., Saat Moderate and Capital World go up and down completely randomly.
Pair Corralation between Saat Moderate and Capital World
Assuming the 90 days horizon Saat Moderate Strategy is expected to generate 0.67 times more return on investment than Capital World. However, Saat Moderate Strategy is 1.5 times less risky than Capital World. It trades about 0.12 of its potential returns per unit of risk. Capital World Bond is currently generating about -0.11 per unit of risk. If you would invest 1,178 in Saat Moderate Strategy on August 29, 2024 and sell it today you would earn a total of 8.00 from holding Saat Moderate Strategy or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Saat Moderate Strategy vs. Capital World Bond
Performance |
| Timeline |
| Saat Moderate Strategy |
| Capital World Bond |
Saat Moderate and Capital World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saat Moderate and Capital World
The main advantage of trading using opposite Saat Moderate and Capital World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saat Moderate position performs unexpectedly, Capital World 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 World will offset losses from the drop in Capital World's long position.| Saat Moderate vs. Vanguard Wellesley Income | Saat Moderate vs. HUMANA INC | Saat Moderate vs. Aquagold International | Saat Moderate vs. Barloworld Ltd ADR |
| Capital World vs. Saat Moderate Strategy | Capital World vs. Franklin Moderate Allocation | Capital World vs. Pgim Conservative Retirement | Capital World vs. Wisdomtree Siegel Moderate |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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