Correlation Between Capital World and Pfg Global

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

By analyzing existing cross correlation between Capital World Growth and Pfg Global Equity, you can compare the effects of market volatilities on Capital World and Pfg Global 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 Pfg Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Pfg Global.

Diversification Opportunities for Capital World and Pfg Global

1.0

Correlation Coefficient

Capital World  Pfg Global

No risk reduction

The 3 months correlation between Capital and Pfg is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Growth and Pfg Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfg Global Equity 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 Pfg Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfg Global Equity has no effect on the direction of Capital World i.e., Capital World and Pfg Global go up and down completely randomly.

Pair Corralation between Capital World and Pfg Global

Assuming the 90 days horizon Capital World Growth is expected to generate 0.85 times more return on investment than Pfg Global. However, Capital World Growth is 1.18 times less risky than Pfg Global. It trades about 0.08 of its potential returns per unit of risk. Pfg Global Equity is currently generating about 0.05 per unit of risk. If you would invest  5,138  in Capital World Growth on May 5, 2025 and sell it today you would earn a total of  1,883  from holding Capital World Growth or generate 36.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	63.84%
Values	Daily Returns

Capital World Growth  vs.  Pfg Global Equity

Capital World Growth

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Capital World Growth are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Capital World may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pfg Global Equity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pfg Global Equity are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Pfg Global may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Capital World and Pfg Global

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

The idea behind Capital World Growth and Pfg Global Equity 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.