Correlation Between Rareview Total and Capital Group

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

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

Diversification Opportunities for Rareview Total and Capital Group

0.92

Correlation Coefficient

Rareview Total  Capital Group

Almost no diversification

The 3 months correlation between Rareview and Capital is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Rareview Total Return 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 Rareview Total 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 Rareview Total Return 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 Rareview Total i.e., Rareview Total and Capital Group go up and down completely randomly.

Pair Corralation between Rareview Total and Capital Group

Given the investment horizon of 90 days Rareview Total Return is expected to generate 1.07 times more return on investment than Capital Group. However, Rareview Total is 1.07 times more volatile than Capital Group Core. It trades about -0.02 of its potential returns per unit of risk. Capital Group Core is currently generating about -0.06 per unit of risk. If you would invest  2,491  in Rareview Total Return on March 4, 2025 and sell it today you would lose (10.00) from holding Rareview Total Return or give up 0.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Rareview Total Return  vs.  Capital Group Core

Rareview Total Return

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rareview Total Return has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Rareview Total is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Capital Group Core

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capital Group Core has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Capital Group is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Rareview Total and Capital Group

The main advantage of trading using opposite Rareview Total and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rareview Total 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 Rareview Total Return 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.