Correlation Between Richelieu Hardware and Capstone Mining
Can any of the company-specific risk be diversified away by investing in both Richelieu Hardware 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 Richelieu Hardware and Capstone Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Richelieu Hardware and Capstone Mining Corp, you can compare the effects of market volatilities on Richelieu Hardware 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 Richelieu Hardware with a short position of Capstone Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richelieu Hardware and Capstone Mining.
Diversification Opportunities for Richelieu Hardware and Capstone Mining
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Richelieu and Capstone is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Richelieu Hardware 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 Richelieu Hardware 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 Richelieu Hardware 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 Richelieu Hardware i.e., Richelieu Hardware and Capstone Mining go up and down completely randomly.
Pair Corralation between Richelieu Hardware and Capstone Mining
Assuming the 90 days trading horizon Richelieu Hardware is expected to generate 2.02 times less return on investment than Capstone Mining. But when comparing it to its historical volatility, Richelieu Hardware is 2.65 times less risky than Capstone Mining. It trades about 0.06 of its potential returns per unit of risk. Capstone Mining Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 983.00 in Capstone Mining Corp on August 25, 2024 and sell it today you would earn a total of 21.00 from holding Capstone Mining Corp or generate 2.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Richelieu Hardware vs. Capstone Mining Corp
Performance |
| Timeline |
| Richelieu Hardware |
| Capstone Mining Corp |
Richelieu Hardware and Capstone Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Richelieu Hardware and Capstone Mining
The main advantage of trading using opposite Richelieu Hardware and Capstone Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richelieu Hardware 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.| Richelieu Hardware vs. Stella Jones | Richelieu Hardware vs. Winpak | Richelieu Hardware vs. Stantec | Richelieu Hardware vs. Gildan Activewear |
| Capstone Mining vs. Wilmington Capital Management | Capstone Mining vs. Metalero Mining Corp | Capstone Mining vs. High Liner Foods | Capstone Mining vs. Lion One Metals |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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