Correlation Between Roper Technologies and Capital Metals
Can any of the company-specific risk be diversified away by investing in both Roper Technologies and Capital Metals 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 Roper Technologies and Capital Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roper Technologies and Capital Metals PLC, you can compare the effects of market volatilities on Roper Technologies and Capital Metals 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 Roper Technologies with a short position of Capital Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roper Technologies and Capital Metals.
Diversification Opportunities for Roper Technologies and Capital Metals
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Roper and Capital is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Roper Technologies and Capital Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Metals PLC and Roper Technologies 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 Roper Technologies are associated (or correlated) with Capital Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Metals PLC has no effect on the direction of Roper Technologies i.e., Roper Technologies and Capital Metals go up and down completely randomly.
Pair Corralation between Roper Technologies and Capital Metals
Assuming the 90 days trading horizon Roper Technologies is expected to generate 1.08 times less return on investment than Capital Metals. But when comparing it to its historical volatility, Roper Technologies is 3.59 times less risky than Capital Metals. It trades about 0.03 of its potential returns per unit of risk. Capital Metals PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 170.00 in Capital Metals PLC on November 7, 2024 and sell it today you would lose (5.00) from holding Capital Metals PLC or give up 2.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Roper Technologies vs. Capital Metals PLC
Performance |
| Timeline |
| Roper Technologies |
| Capital Metals PLC |
Roper Technologies and Capital Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roper Technologies and Capital Metals
The main advantage of trading using opposite Roper Technologies and Capital Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roper Technologies position performs unexpectedly, Capital Metals 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 Metals will offset losses from the drop in Capital Metals' long position.| Roper Technologies vs. Roebuck Food Group | Roper Technologies vs. Ebro Foods | Roper Technologies vs. Bell Food Group | Roper Technologies vs. Coeur Mining |
| Capital Metals vs. Europa Metals | Capital Metals vs. Games Workshop Group | Capital Metals vs. Take Two Interactive Software | Capital Metals vs. Golden Metal Resources |
Check out your portfolio center.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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