Correlation Between Capital Group and Formidable ETF

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

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

Diversification Opportunities for Capital Group and Formidable ETF

0.92

Correlation Coefficient

Capital Group  Formidable ETF

Almost no diversification

The 3 months correlation between Capital and Formidable is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Capital Group Global and Formidable ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formidable ETF and Capital Group 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 Group Global are associated (or correlated) with Formidable ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formidable ETF has no effect on the direction of Capital Group i.e., Capital Group and Formidable ETF go up and down completely randomly.

Pair Corralation between Capital Group and Formidable ETF

Given the investment horizon of 90 days Capital Group Global is expected to generate 1.05 times more return on investment than Formidable ETF. However, Capital Group is 1.05 times more volatile than Formidable ETF. It trades about 0.22 of its potential returns per unit of risk. Formidable ETF is currently generating about 0.06 per unit of risk. If you would invest  2,970  in Capital Group Global on May 10, 2025 and sell it today you would earn a total of  278.00  from holding Capital Group Global or generate 9.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Capital Group Global  vs.  Formidable ETF

Capital Group Global

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Group Global are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Capital Group may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Formidable ETF

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Formidable ETF are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Formidable ETF is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Capital Group and Formidable ETF

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

The idea behind Capital Group Global and Formidable ETF 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.