Correlation Between Intermediate Capital and Capital Metals
Can any of the company-specific risk be diversified away by investing in both Intermediate Capital and Capital 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 Intermediate Capital and Capital Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intermediate Capital Group and Capital Metals PLC, you can compare the effects of market volatilities on Intermediate Capital and Capital 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 Intermediate Capital with a short position of Capital Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Capital and Capital Metals.
Diversification Opportunities for Intermediate Capital and Capital Metals
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Intermediate and Capital is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Capital Group and Capital Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Metals PLC and Intermediate Capital 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 Intermediate Capital Group are associated (or correlated) with Capital Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Metals PLC has no effect on the direction of Intermediate Capital i.e., Intermediate Capital and Capital Metals go up and down completely randomly.
Pair Corralation between Intermediate Capital and Capital Metals
Assuming the 90 days trading horizon Intermediate Capital Group is expected to under-perform the Capital Metals. But the stock apears to be less risky and, when comparing its historical volatility, Intermediate Capital Group is 1.94 times less risky than Capital Metals. The stock trades about -0.4 of its potential returns per unit of risk. The Capital Metals PLC is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 160.00 in Capital Metals PLC on January 4, 2025 and sell it today you would earn a total of 110.00 from holding Capital Metals PLC or generate 68.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Intermediate Capital Group vs. Capital Metals PLC
Performance |
| Timeline |
| Intermediate Capital |
| Capital Metals PLC |
Intermediate Capital and Capital Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate Capital and Capital Metals
The main advantage of trading using opposite Intermediate Capital and Capital Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Capital position performs unexpectedly, Capital 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 Capital Metals will offset losses from the drop in Capital Metals' long position.| Intermediate Capital vs. Silvercorp Metals | Intermediate Capital vs. Cairn Homes PLC | Intermediate Capital vs. Power Metal Resources | Intermediate Capital vs. American Homes 4 |
| Capital Metals vs. Kinnevik Investment AB | Capital Metals vs. Lowland Investment Co | Capital Metals vs. Primorus Investments plc | Capital Metals vs. BlackRock Frontiers Investment |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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