Correlation Between SPACE and Capital World

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

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

Diversification Opportunities for SPACE and Capital World

-0.39

Correlation Coefficient

SPACE  Capital World

Very good diversification

The 3 months correlation between SPACE and Capital is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and Capital World Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World Growth and SPACE 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 SPACE 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 Growth has no effect on the direction of SPACE i.e., SPACE and Capital World go up and down completely randomly.

Pair Corralation between SPACE and Capital World

Assuming the 90 days horizon SPACE is expected to under-perform the Capital World. In addition to that, SPACE is 7.36 times more volatile than Capital World Growth. It trades about -0.12 of its total potential returns per unit of risk. Capital World Growth is currently generating about 0.0 per unit of volatility. If you would invest  6,351  in Capital World Growth on December 29, 2024 and sell it today you would lose (10.00) from holding Capital World Growth or give up 0.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

SPACE  vs.  Capital World Growth

SPACE

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPACE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for SPACE shareholders.

Capital World Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capital World Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Capital World is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SPACE and Capital World

The main advantage of trading using opposite SPACE and Capital World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE 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.

The idea behind SPACE and Capital World Growth 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.