Correlation Between Capital Income and Pinebridge Dynamic

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

By analyzing existing cross correlation between Capital Income Builder and Pinebridge Dynamic Asset, you can compare the effects of market volatilities on Capital Income and Pinebridge Dynamic 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 Income with a short position of Pinebridge Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Pinebridge Dynamic.

Diversification Opportunities for Capital Income and Pinebridge Dynamic

0.77

Correlation Coefficient

Capital Income  Pinebridge Dynamic

Poor diversification

The 3 months correlation between CAPITAL and Pinebridge is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and Pinebridge Dynamic Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinebridge Dynamic Asset and Capital Income 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 Income Builder are associated (or correlated) with Pinebridge Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinebridge Dynamic Asset has no effect on the direction of Capital Income i.e., Capital Income and Pinebridge Dynamic go up and down completely randomly.

Pair Corralation between Capital Income and Pinebridge Dynamic

Assuming the 90 days horizon Capital Income is expected to generate 2.9 times less return on investment than Pinebridge Dynamic. But when comparing it to its historical volatility, Capital Income Builder is 1.16 times less risky than Pinebridge Dynamic. It trades about 0.02 of its potential returns per unit of risk. Pinebridge Dynamic Asset is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,151  in Pinebridge Dynamic Asset on February 14, 2025 and sell it today you would earn a total of  21.00  from holding Pinebridge Dynamic Asset or generate 1.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.67%
Values	Daily Returns

Capital Income Builder  vs.  Pinebridge Dynamic Asset

Capital Income Builder

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Income Builder are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Capital Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pinebridge Dynamic Asset

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pinebridge Dynamic Asset has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pinebridge Dynamic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Capital Income and Pinebridge Dynamic

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

The idea behind Capital Income Builder and Pinebridge Dynamic Asset 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.