Correlation Between Capital Income and Aig Government
Can any of the company-specific risk be diversified away by investing in both Capital Income and Aig Government 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 Income and Aig Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Income Builder and Aig Government Money, you can compare the effects of market volatilities on Capital Income and Aig Government 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 Income with a short position of Aig Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Aig Government.
Diversification Opportunities for Capital Income and Aig Government
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and Aig is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and Aig Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aig Government Money and Capital Income 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 Income Builder are associated (or correlated) with Aig Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aig Government Money has no effect on the direction of Capital Income i.e., Capital Income and Aig Government go up and down completely randomly.
Pair Corralation between Capital Income and Aig Government
Assuming the 90 days horizon Capital Income Builder is expected to generate 2.97 times more return on investment than Aig Government. However, Capital Income is 2.97 times more volatile than Aig Government Money. It trades about 0.16 of its potential returns per unit of risk. Aig Government Money is currently generating about -0.03 per unit of risk. If you would invest 6,861 in Capital Income Builder on December 28, 2024 and sell it today you would earn a total of 353.00 from holding Capital Income Builder or generate 5.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.36% |
Values | Daily Returns |
Capital Income Builder vs. Aig Government Money
Performance |
Timeline |
Capital Income Builder |
Aig Government Money |
Capital Income and Aig Government Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Capital Income and Aig Government
The main advantage of trading using opposite Capital Income and Aig Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, Aig Government 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 Aig Government will offset losses from the drop in Aig Government's long position.Capital Income vs. Rbc Emerging Markets | Capital Income vs. Pnc Emerging Markets | Capital Income vs. Virtus Emerging Markets | Capital Income vs. Doubleline Emerging Markets |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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