Correlation Between Capital Group and Xtrackers MSCI

Can any of the company-specific risk be diversified away by investing in both Capital Group and Xtrackers MSCI 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 Group and Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Capital Group Dividend and Xtrackers MSCI Kokusai, you can compare the effects of market volatilities on Capital Group and Xtrackers MSCI 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 Group with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Group and Xtrackers MSCI.

Diversification Opportunities for Capital Group and Xtrackers MSCI

0.32

Correlation Coefficient

Capital Group  Xtrackers MSCI

Weak diversification

The 3 months correlation between Capital and Xtrackers is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Capital Group Dividend and Xtrackers MSCI Kokusai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI Kokusai and Capital Group 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 Group Dividend are associated (or correlated) with Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI Kokusai has no effect on the direction of Capital Group i.e., Capital Group and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between Capital Group and Xtrackers MSCI

Given the investment horizon of 90 days Capital Group Dividend is expected to under-perform the Xtrackers MSCI. But the etf apears to be less risky and, when comparing its historical volatility, Capital Group Dividend is 1.13 times less risky than Xtrackers MSCI. The etf trades about -0.05 of its potential returns per unit of risk. The Xtrackers MSCI Kokusai is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  10,025  in Xtrackers MSCI Kokusai on October 23, 2024 and sell it today you would earn a total of  245.00  from holding Xtrackers MSCI Kokusai or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Capital Group Dividend  vs.  Xtrackers MSCI Kokusai

Capital Group Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Group Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Capital Group is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Xtrackers MSCI Kokusai

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI Kokusai are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, Xtrackers MSCI is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Capital Group and Xtrackers MSCI

The main advantage of trading using opposite Capital Group and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Group position performs unexpectedly, Xtrackers MSCI 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 Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI's long position.

The idea behind Capital Group Dividend and Xtrackers MSCI Kokusai pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.