Correlation Between Capstone Infrastructure and TransAlta Corp
Can any of the company-specific risk be diversified away by investing in both Capstone Infrastructure and TransAlta Corp 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 Infrastructure and TransAlta Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capstone Infrastructure Corp and TransAlta Corp, you can compare the effects of market volatilities on Capstone Infrastructure and TransAlta Corp 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 Infrastructure with a short position of TransAlta Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capstone Infrastructure and TransAlta Corp.
Diversification Opportunities for Capstone Infrastructure and TransAlta Corp
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capstone and TransAlta is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Infrastructure Corp and TransAlta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAlta Corp and Capstone Infrastructure 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 Infrastructure Corp are associated (or correlated) with TransAlta Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAlta Corp has no effect on the direction of Capstone Infrastructure i.e., Capstone Infrastructure and TransAlta Corp go up and down completely randomly.
Pair Corralation between Capstone Infrastructure and TransAlta Corp
Assuming the 90 days trading horizon Capstone Infrastructure is expected to generate 2.03 times less return on investment than TransAlta Corp. But when comparing it to its historical volatility, Capstone Infrastructure Corp is 1.93 times less risky than TransAlta Corp. It trades about 0.06 of its potential returns per unit of risk. TransAlta Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,239 in TransAlta Corp on September 12, 2024 and sell it today you would earn a total of 618.00 from holding TransAlta Corp or generate 49.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capstone Infrastructure Corp vs. TransAlta Corp
Performance |
| Timeline |
| Capstone Infrastructure |
| TransAlta Corp |
Capstone Infrastructure and TransAlta Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capstone Infrastructure and TransAlta Corp
The main advantage of trading using opposite Capstone Infrastructure and TransAlta Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capstone Infrastructure position performs unexpectedly, TransAlta Corp 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 TransAlta Corp will offset losses from the drop in TransAlta Corp's long position.| Capstone Infrastructure vs. Brookfield Renewable Partners | Capstone Infrastructure vs. TransAlta Corp | Capstone Infrastructure vs. Transalta A Cum | Capstone Infrastructure vs. Maxim Power Corp |
| TransAlta Corp vs. Emera Inc | TransAlta Corp vs. TC Energy Corp | TransAlta Corp vs. Imperial Oil | TransAlta Corp vs. Sun Life Financial |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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