Correlation Between Capital Metals and Trainline Plc
Can any of the company-specific risk be diversified away by investing in both Capital Metals and Trainline Plc 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 Trainline Plc 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 Trainline Plc, you can compare the effects of market volatilities on Capital Metals and Trainline Plc 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 Trainline Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Metals and Trainline Plc.
Diversification Opportunities for Capital Metals and Trainline Plc
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capital and Trainline is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Capital Metals PLC and Trainline Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trainline Plc 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 Trainline Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trainline Plc has no effect on the direction of Capital Metals i.e., Capital Metals and Trainline Plc go up and down completely randomly.
Pair Corralation between Capital Metals and Trainline Plc
Assuming the 90 days trading horizon Capital Metals PLC is expected to generate 0.55 times more return on investment than Trainline Plc. However, Capital Metals PLC is 1.8 times less risky than Trainline Plc. It trades about -0.15 of its potential returns per unit of risk. Trainline Plc is currently generating about -0.22 per unit of risk. If you would invest 170.00 in Capital Metals PLC on October 30, 2024 and sell it today you would lose (10.00) from holding Capital Metals PLC or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Metals PLC vs. Trainline Plc
Performance |
| Timeline |
| Capital Metals PLC |
| Trainline Plc |
Capital Metals and Trainline Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Metals and Trainline Plc
The main advantage of trading using opposite Capital Metals and Trainline Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Metals position performs unexpectedly, Trainline Plc 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 Trainline Plc will offset losses from the drop in Trainline Plc's long position.| Capital Metals vs. Givaudan SA | Capital Metals vs. Antofagasta PLC | Capital Metals vs. Ferrexpo PLC | Capital Metals vs. Atalaya Mining |
| Trainline Plc vs. Jacquet Metal Service | Trainline Plc vs. Melia Hotels | Trainline Plc vs. Erste Group Bank | Trainline Plc vs. Nordea Bank Abp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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