Correlation Between Capital Group and AB Disruptors

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

By analyzing existing cross correlation between Capital Group Global and AB Disruptors ETF, you can compare the effects of market volatilities on Capital Group and AB Disruptors 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 AB Disruptors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Group and AB Disruptors.

Diversification Opportunities for Capital Group and AB Disruptors

0.92

Correlation Coefficient

Capital Group  AB Disruptors

Almost no diversification

The 3 months correlation between Capital and FWD is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Capital Group Global and AB Disruptors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Disruptors ETF 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 Global are associated (or correlated) with AB Disruptors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Disruptors ETF has no effect on the direction of Capital Group i.e., Capital Group and AB Disruptors go up and down completely randomly.

Pair Corralation between Capital Group and AB Disruptors

Given the investment horizon of 90 days Capital Group Global is expected to generate 0.53 times more return on investment than AB Disruptors. However, Capital Group Global is 1.9 times less risky than AB Disruptors. It trades about -0.03 of its potential returns per unit of risk. AB Disruptors ETF is currently generating about -0.07 per unit of risk. If you would invest  2,962  in Capital Group Global on December 27, 2024 and sell it today you would lose (64.00) from holding Capital Group Global or give up 2.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Capital Group Global  vs.  AB Disruptors ETF

Capital Group Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capital Group Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Capital Group is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

AB Disruptors ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days AB Disruptors ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Capital Group and AB Disruptors

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

The idea behind Capital Group Global and AB Disruptors ETF 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..