Correlation Between Capstone Mining and Transition Metals
Can any of the company-specific risk be diversified away by investing in both Capstone Mining and Transition Metals 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 Transition Metals 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 Transition Metals Corp, you can compare the effects of market volatilities on Capstone Mining and Transition Metals 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 Transition Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capstone Mining and Transition Metals.
Diversification Opportunities for Capstone Mining and Transition Metals
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Capstone and Transition is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and Transition Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transition Metals 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 Transition Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transition Metals Corp has no effect on the direction of Capstone Mining i.e., Capstone Mining and Transition Metals go up and down completely randomly.
Pair Corralation between Capstone Mining and Transition Metals
Assuming the 90 days horizon Capstone Mining is expected to generate 1.68 times less return on investment than Transition Metals. But when comparing it to its historical volatility, Capstone Mining Corp is 2.98 times less risky than Transition Metals. It trades about 0.05 of its potential returns per unit of risk. Transition Metals Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7.00 in Transition Metals Corp on September 12, 2024 and sell it today you would lose (2.00) from holding Transition Metals Corp or give up 28.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capstone Mining Corp vs. Transition Metals Corp
Performance |
| Timeline |
| Capstone Mining Corp |
| Transition Metals Corp |
Capstone Mining and Transition Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capstone Mining and Transition Metals
The main advantage of trading using opposite Capstone Mining and Transition Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capstone Mining position performs unexpectedly, Transition Metals 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 Transition Metals will offset losses from the drop in Transition Metals' 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 |
| Transition Metals vs. Ressources Minieres Radisson | Transition Metals vs. Galantas Gold Corp | Transition Metals vs. Red Pine Exploration | Transition Metals vs. Kore Mining |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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