Correlation Between Capstone Mining and Timbercreek Financial
Can any of the company-specific risk be diversified away by investing in both Capstone Mining and Timbercreek Financial 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 Timbercreek Financial 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 Timbercreek Financial Corp, you can compare the effects of market volatilities on Capstone Mining and Timbercreek Financial 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 Timbercreek Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capstone Mining and Timbercreek Financial.
Diversification Opportunities for Capstone Mining and Timbercreek Financial
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capstone and Timbercreek is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and Timbercreek Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timbercreek Financial 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 Timbercreek Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timbercreek Financial has no effect on the direction of Capstone Mining i.e., Capstone Mining and Timbercreek Financial go up and down completely randomly.
Pair Corralation between Capstone Mining and Timbercreek Financial
Assuming the 90 days horizon Capstone Mining Corp is expected to generate 1.55 times more return on investment than Timbercreek Financial. However, Capstone Mining is 1.55 times more volatile than Timbercreek Financial Corp. It trades about -0.07 of its potential returns per unit of risk. Timbercreek Financial Corp is currently generating about -0.14 per unit of risk. If you would invest 991.00 in Capstone Mining Corp on August 31, 2024 and sell it today you would lose (48.00) from holding Capstone Mining Corp or give up 4.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capstone Mining Corp vs. Timbercreek Financial Corp
Performance |
| Timeline |
| Capstone Mining Corp |
| Timbercreek Financial |
Capstone Mining and Timbercreek Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capstone Mining and Timbercreek Financial
The main advantage of trading using opposite Capstone Mining and Timbercreek Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capstone Mining position performs unexpectedly, Timbercreek Financial 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 Timbercreek Financial will offset losses from the drop in Timbercreek Financial's long position.| Capstone Mining vs. Solar Alliance Energy | Capstone Mining vs. Global X Active | Capstone Mining vs. Financial 15 Split | Capstone Mining vs. Rubicon Organics |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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