Correlation Between NextSource Materials and Capstone Mining
Can any of the company-specific risk be diversified away by investing in both NextSource Materials and Capstone Mining 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 NextSource Materials and Capstone Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NextSource Materials and Capstone Mining Corp, you can compare the effects of market volatilities on NextSource Materials and Capstone Mining 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 NextSource Materials with a short position of Capstone Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextSource Materials and Capstone Mining.
Diversification Opportunities for NextSource Materials and Capstone Mining
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NextSource and Capstone is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding NextSource Materials and Capstone Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Mining Corp and NextSource Materials 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 NextSource Materials are associated (or correlated) with Capstone Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Mining Corp has no effect on the direction of NextSource Materials i.e., NextSource Materials and Capstone Mining go up and down completely randomly.
Pair Corralation between NextSource Materials and Capstone Mining
Assuming the 90 days trading horizon NextSource Materials is expected to under-perform the Capstone Mining. In addition to that, NextSource Materials is 1.44 times more volatile than Capstone Mining Corp. It trades about -0.04 of its total potential returns per unit of risk. Capstone Mining Corp is currently generating about 0.04 per unit of volatility. If you would invest 639.00 in Capstone Mining Corp on October 12, 2024 and sell it today you would earn a total of 284.00 from holding Capstone Mining Corp or generate 44.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NextSource Materials vs. Capstone Mining Corp
Performance |
| Timeline |
| NextSource Materials |
| Capstone Mining Corp |
NextSource Materials and Capstone Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NextSource Materials and Capstone Mining
The main advantage of trading using opposite NextSource Materials and Capstone Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextSource Materials position performs unexpectedly, Capstone Mining 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 Mining will offset losses from the drop in Capstone Mining's long position.| NextSource Materials vs. Leading Edge Materials | NextSource Materials vs. Northern Graphite | NextSource Materials vs. Elcora Advanced Materials | NextSource Materials vs. Mason Graphite |
| Capstone Mining vs. CNJ Capital Investments | Capstone Mining vs. XXIX Metal Corp | Capstone Mining vs. Sun Peak Metals | Capstone Mining vs. Information Services |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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