Correlation Between Capstone Mining and Brookfield Business
Can any of the company-specific risk be diversified away by investing in both Capstone Mining and Brookfield Business 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 Capstone Mining and Brookfield Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capstone Mining Corp and Brookfield Business Corp, you can compare the effects of market volatilities on Capstone Mining and Brookfield Business 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 Capstone Mining with a short position of Brookfield Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capstone Mining and Brookfield Business.
Diversification Opportunities for Capstone Mining and Brookfield Business
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capstone and Brookfield is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and Brookfield Business Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Business Corp and Capstone Mining 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 Capstone Mining Corp are associated (or correlated) with Brookfield Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Business Corp has no effect on the direction of Capstone Mining i.e., Capstone Mining and Brookfield Business go up and down completely randomly.
Pair Corralation between Capstone Mining and Brookfield Business
Assuming the 90 days horizon Capstone Mining Corp is expected to generate 1.37 times more return on investment than Brookfield Business. However, Capstone Mining is 1.37 times more volatile than Brookfield Business Corp. It trades about 0.05 of its potential returns per unit of risk. Brookfield Business Corp is currently generating about 0.02 per unit of risk. If you would invest 635.00 in Capstone Mining Corp on November 3, 2024 and sell it today you would earn a total of 179.00 from holding Capstone Mining Corp or generate 28.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Capstone Mining Corp vs. Brookfield Business Corp
Performance |
| Timeline |
| Capstone Mining Corp |
| Brookfield Business Corp |
Capstone Mining and Brookfield Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capstone Mining and Brookfield Business
The main advantage of trading using opposite Capstone Mining and Brookfield Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capstone Mining position performs unexpectedly, Brookfield Business 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 Brookfield Business will offset losses from the drop in Brookfield Business' long position.| Capstone Mining vs. Pace Metals | Capstone Mining vs. Nano One Materials | Capstone Mining vs. NeXGold Mining Corp | Capstone Mining vs. Andean Precious Metals |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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