Correlation Between Maxim Power and Capstone Infrastructure
Can any of the company-specific risk be diversified away by investing in both Maxim Power and Capstone Infrastructure 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 Maxim Power and Capstone Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maxim Power Corp and Capstone Infrastructure Corp, you can compare the effects of market volatilities on Maxim Power and Capstone Infrastructure 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 Maxim Power with a short position of Capstone Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maxim Power and Capstone Infrastructure.
Diversification Opportunities for Maxim Power and Capstone Infrastructure
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Maxim and Capstone is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Maxim Power Corp and Capstone Infrastructure Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Infrastructure and Maxim Power 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 Maxim Power Corp are associated (or correlated) with Capstone Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Infrastructure has no effect on the direction of Maxim Power i.e., Maxim Power and Capstone Infrastructure go up and down completely randomly.
Pair Corralation between Maxim Power and Capstone Infrastructure
Assuming the 90 days trading horizon Maxim Power Corp is expected to generate 6.3 times more return on investment than Capstone Infrastructure. However, Maxim Power is 6.3 times more volatile than Capstone Infrastructure Corp. It trades about 0.32 of its potential returns per unit of risk. Capstone Infrastructure Corp is currently generating about 0.04 per unit of risk. If you would invest 347.00 in Maxim Power Corp on September 12, 2024 and sell it today you would earn a total of 166.00 from holding Maxim Power Corp or generate 47.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maxim Power Corp vs. Capstone Infrastructure Corp
Performance |
| Timeline |
| Maxim Power Corp |
| Capstone Infrastructure |
Maxim Power and Capstone Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maxim Power and Capstone Infrastructure
The main advantage of trading using opposite Maxim Power and Capstone Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maxim Power position performs unexpectedly, Capstone Infrastructure 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 Capstone Infrastructure will offset losses from the drop in Capstone Infrastructure's long position.| Maxim Power vs. Caldwell Partners International | Maxim Power vs. Chesswood Group Limited | Maxim Power vs. Mccoy Global | Maxim Power vs. Pulse Seismic |
| Capstone Infrastructure vs. Brookfield Renewable Partners | Capstone Infrastructure vs. TransAlta Corp | Capstone Infrastructure vs. Transalta A Cum | Capstone Infrastructure vs. Maxim Power Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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