Correlation Between Valued Advisers and Capital Group

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

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

Diversification Opportunities for Valued Advisers and Capital Group

0.88

Correlation Coefficient

Valued Advisers  Capital Group

Very poor diversification

The 3 months correlation between Valued and Capital is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Valued Advisers Trust and Capital Group Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Fixed and Valued Advisers 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 Valued Advisers Trust 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 Fixed has no effect on the direction of Valued Advisers i.e., Valued Advisers and Capital Group go up and down completely randomly.

Pair Corralation between Valued Advisers and Capital Group

Given the investment horizon of 90 days Valued Advisers is expected to generate 299.24 times less return on investment than Capital Group. But when comparing it to its historical volatility, Valued Advisers Trust is 420.92 times less risky than Capital Group. It trades about 0.13 of its potential returns per unit of risk. Capital Group Fixed is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Capital Group Fixed on September 13, 2024 and sell it today you would earn a total of  2,524  from holding Capital Group Fixed or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	59.0%
Values	Daily Returns

Valued Advisers Trust  vs.  Capital Group Fixed

Valued Advisers Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Valued Advisers Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Valued Advisers is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Capital Group Fixed

Risk-Adjusted Performance

36 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Group Fixed are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Capital Group is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Valued Advisers and Capital Group

The main advantage of trading using opposite Valued Advisers and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valued Advisers 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 Valued Advisers Trust and Capital Group Fixed 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.