Correlation Between Capstone Mining and Leons Furniture
Can any of the company-specific risk be diversified away by investing in both Capstone Mining and Leons Furniture 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 Leons Furniture 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 Leons Furniture Limited, you can compare the effects of market volatilities on Capstone Mining and Leons Furniture 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 Leons Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capstone Mining and Leons Furniture.
Diversification Opportunities for Capstone Mining and Leons Furniture
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capstone and Leons is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and Leons Furniture Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leons Furniture 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 Leons Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leons Furniture has no effect on the direction of Capstone Mining i.e., Capstone Mining and Leons Furniture go up and down completely randomly.
Pair Corralation between Capstone Mining and Leons Furniture
Assuming the 90 days horizon Capstone Mining Corp is expected to generate 1.49 times more return on investment than Leons Furniture. However, Capstone Mining is 1.49 times more volatile than Leons Furniture Limited. It trades about 0.05 of its potential returns per unit of risk. Leons Furniture Limited is currently generating about 0.05 per unit of risk. If you would invest 638.00 in Capstone Mining Corp on September 12, 2024 and sell it today you would earn a total of 305.00 from holding Capstone Mining Corp or generate 47.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capstone Mining Corp vs. Leons Furniture Limited
Performance |
| Timeline |
| Capstone Mining Corp |
| Leons Furniture |
Capstone Mining and Leons Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capstone Mining and Leons Furniture
The main advantage of trading using opposite Capstone Mining and Leons Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capstone Mining position performs unexpectedly, Leons Furniture 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 Leons Furniture will offset losses from the drop in Leons Furniture's long position.| Capstone Mining vs. Gfl Environmental Holdings | Capstone Mining vs. Metalero Mining Corp | Capstone Mining vs. NorthWest Healthcare Properties | Capstone Mining vs. Ramp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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