Correlation Between IShares Core and Capital Group

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

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

Diversification Opportunities for IShares Core and Capital Group

-0.35

Correlation Coefficient

IShares Core  Capital Group

Very good diversification

The 3 months correlation between IShares and Capital is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Capital Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Intern and IShares Core 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 iShares Core SP are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Intern has no effect on the direction of IShares Core i.e., IShares Core and Capital Group go up and down completely randomly.

Pair Corralation between IShares Core and Capital Group

Given the investment horizon of 90 days iShares Core SP is expected to generate 0.87 times more return on investment than Capital Group. However, iShares Core SP is 1.16 times less risky than Capital Group. It trades about 0.23 of its potential returns per unit of risk. Capital Group International is currently generating about -0.02 per unit of risk. If you would invest  12,018  in iShares Core SP on September 4, 2024 and sell it today you would earn a total of  1,321  from holding iShares Core SP or generate 10.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

iShares Core SP  vs.  Capital Group International

iShares Core SP

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Capital Group Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Group International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Capital Group is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares Core and Capital Group

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

The idea behind iShares Core SP and Capital Group International 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.