Correlation Between Kurv Yield and Capital Group

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

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

Diversification Opportunities for Kurv Yield and Capital Group

0.76

Correlation Coefficient

Kurv Yield  Capital Group

Poor diversification

The 3 months correlation between Kurv and Capital is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kurv Yield Premium and Capital Group Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Core and Kurv Yield 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 Kurv Yield Premium 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 Core has no effect on the direction of Kurv Yield i.e., Kurv Yield and Capital Group go up and down completely randomly.

Pair Corralation between Kurv Yield and Capital Group

Given the investment horizon of 90 days Kurv Yield Premium is expected to generate 3.74 times more return on investment than Capital Group. However, Kurv Yield is 3.74 times more volatile than Capital Group Core. It trades about 0.07 of its potential returns per unit of risk. Capital Group Core is currently generating about 0.12 per unit of risk. If you would invest  1,806  in Kurv Yield Premium on October 4, 2024 and sell it today you would earn a total of  1,221  from holding Kurv Yield Premium or generate 67.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	60.0%
Values	Daily Returns

Kurv Yield Premium  vs.  Capital Group Core

Kurv Yield Premium

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kurv Yield Premium are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, Kurv Yield reported solid returns over the last few months and may actually be approaching a breakup point.

Capital Group Core

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Group Core are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Capital Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kurv Yield and Capital Group

The main advantage of trading using opposite Kurv Yield and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kurv Yield 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 Kurv Yield Premium and Capital Group Core 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.