Correlation Between Capital World and American Funds

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

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Can any of the company-specific risk be diversified away by investing in both Capital World and American Funds at the same time? Although using correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combing Capital World and American Funds into the same portfolio which is an essential part of fundamental portfolio management process.

Diversification Opportunities for Capital World and American Funds

0.98
Correlation
CW
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Almost no diversification

The 3 months correlation between Capital and American is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Growth And Incom and American Funds Global Growth P in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on American Funds Global and Capital World 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 World Growth are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Global has no effect on the direction of Capital World i.e. Capital World and American Funds go up and down completely randomly.

Pair Corralation between Capital World and American Funds

Assuming 30 trading days horizon, Capital World is expected to generate 3.72 times less return on investment than American Funds. In addition to that, Capital World is 1.05 times more volatile than American Funds Global. It trades about 0.0 of its total potential returns per unit of risk. American Funds Global is currently generating about 0.01 per unit of volatility. If you would invest  1,692  in American Funds Global on May 3, 2020 and sell it today you would lose (32.00)  from holding American Funds Global or give up 1.89% of portfolio value over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Capital World Growth And Incom  vs.  American Funds Global Growth P

 Performance (%) 
      Timeline 
Capital World Growth 
00

Risk-Adjusted Fund Performance

Over the last 30 days Capital World Growth has generated negative risk-adjusted returns adding no value to fund investors. Inspite fairly strong basic indicators, Capital World is not utilizing all of its potentials. The current stock price disturbance, may contribute to short term losses for the investors.
American Funds Global 
00

Risk-Adjusted Fund Performance

Over the last 30 days American Funds Global has generated negative risk-adjusted returns adding no value to fund investors. Inspite fairly strong basic indicators, American Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short term losses for the investors.

Capital World and American Funds Volatility Contrast

 Predicted Return Density 
      Returns 
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