Correlation Between Weir Group and Capstone Green
Can any of the company-specific risk be diversified away by investing in both Weir Group and Capstone Green 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 Weir Group and Capstone Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weir Group PLC and Capstone Green Energy, you can compare the effects of market volatilities on Weir Group and Capstone Green 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 Weir Group with a short position of Capstone Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weir Group and Capstone Green.
Diversification Opportunities for Weir Group and Capstone Green
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Weir and Capstone is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Weir Group PLC and Capstone Green Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Green Energy and Weir Group 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 Weir Group PLC are associated (or correlated) with Capstone Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Green Energy has no effect on the direction of Weir Group i.e., Weir Group and Capstone Green go up and down completely randomly.
Pair Corralation between Weir Group and Capstone Green
Assuming the 90 days horizon Weir Group PLC is expected to generate 0.44 times more return on investment than Capstone Green. However, Weir Group PLC is 2.26 times less risky than Capstone Green. It trades about 0.05 of its potential returns per unit of risk. Capstone Green Energy is currently generating about -0.03 per unit of risk. If you would invest 1,009 in Weir Group PLC on September 3, 2024 and sell it today you would earn a total of 400.00 from holding Weir Group PLC or generate 39.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.61% |
| Values | Daily Returns |
Weir Group PLC vs. Capstone Green Energy
Performance |
| Timeline |
| Weir Group PLC |
| Capstone Green Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Weir Group and Capstone Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weir Group and Capstone Green
The main advantage of trading using opposite Weir Group and Capstone Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weir Group position performs unexpectedly, Capstone Green 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 Green will offset losses from the drop in Capstone Green's long position.| Weir Group vs. Dear Cashmere Holding | Weir Group vs. Goff Corp | Weir Group vs. Wialan Technologies | Weir Group vs. Cgrowth Capital |
| Capstone Green vs. Nordson | Capstone Green vs. CVD Equipment | Capstone Green vs. Barnes Group | Capstone Green vs. Ametek Inc |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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