Correlation Between Burney Factor and Capital Group

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

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

Diversification Opportunities for Burney Factor and Capital Group

-0.29

Correlation Coefficient

Burney Factor  Capital Group

Very good diversification

The 3 months correlation between Burney and Capital is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Burney Factor Rotation and Capital Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Intern and Burney Factor 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 Burney Factor Rotation 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 Intern has no effect on the direction of Burney Factor i.e., Burney Factor and Capital Group go up and down completely randomly.

Pair Corralation between Burney Factor and Capital Group

Given the investment horizon of 90 days Burney Factor Rotation is expected to generate 0.96 times more return on investment than Capital Group. However, Burney Factor Rotation is 1.04 times less risky than Capital Group. It trades about 0.25 of its potential returns per unit of risk. Capital Group International is currently generating about 0.01 per unit of risk. If you would invest  3,781  in Burney Factor Rotation on September 12, 2024 and sell it today you would earn a total of  524.00  from holding Burney Factor Rotation or generate 13.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Burney Factor Rotation  vs.  Capital Group International

Burney Factor Rotation

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Burney Factor Rotation are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Burney Factor showed solid returns over the last few months and may actually be approaching a breakup point.

Capital Group Intern

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Capital Group International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Capital Group is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Burney Factor and Capital Group

The main advantage of trading using opposite Burney Factor and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burney Factor 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 Burney Factor Rotation and Capital Group International 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..