Correlation Between Capital Metals and Falcon Oil
Can any of the company-specific risk be diversified away by investing in both Capital Metals and Falcon Oil 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 Metals and Falcon Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Metals PLC and Falcon Oil Gas, you can compare the effects of market volatilities on Capital Metals and Falcon Oil 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 Metals with a short position of Falcon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Metals and Falcon Oil.
Diversification Opportunities for Capital Metals and Falcon Oil
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Capital and Falcon is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Capital Metals PLC and Falcon Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Oil Gas and Capital Metals 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 Metals PLC are associated (or correlated) with Falcon Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Oil Gas has no effect on the direction of Capital Metals i.e., Capital Metals and Falcon Oil go up and down completely randomly.
Pair Corralation between Capital Metals and Falcon Oil
Assuming the 90 days trading horizon Capital Metals PLC is expected to generate 3.25 times more return on investment than Falcon Oil. However, Capital Metals is 3.25 times more volatile than Falcon Oil Gas. It trades about 0.03 of its potential returns per unit of risk. Falcon Oil Gas is currently generating about -0.02 per unit of risk. If you would invest 265.00 in Capital Metals PLC on October 11, 2024 and sell it today you would lose (95.00) from holding Capital Metals PLC or give up 35.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Metals PLC vs. Falcon Oil Gas
Performance |
| Timeline |
| Capital Metals PLC |
| Falcon Oil Gas |
Capital Metals and Falcon Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Metals and Falcon Oil
The main advantage of trading using opposite Capital Metals and Falcon Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Metals position performs unexpectedly, Falcon Oil 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 Falcon Oil will offset losses from the drop in Falcon Oil's long position.| Capital Metals vs. Givaudan SA | Capital Metals vs. Antofagasta PLC | Capital Metals vs. Ferrexpo PLC | Capital Metals vs. Atalaya Mining |
| Falcon Oil vs. Batm Advanced Communications | Falcon Oil vs. First Class Metals | Falcon Oil vs. Capital Metals PLC | Falcon Oil vs. Gamma Communications PLC |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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