Correlation Between Capstone Mining and Costco Wholesale

Can any of the company-specific risk be diversified away by investing in both Capstone Mining and Costco Wholesale 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 Capstone Mining and Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Capstone Mining Corp and Costco Wholesale Corp, you can compare the effects of market volatilities on Capstone Mining and Costco Wholesale 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 Capstone Mining with a short position of Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capstone Mining and Costco Wholesale.

Diversification Opportunities for Capstone Mining and Costco Wholesale

-0.71

Correlation Coefficient

Capstone Mining  Costco Wholesale

Pay attention - limited upside

The 3 months correlation between Capstone and Costco is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and Costco Wholesale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale Corp and Capstone Mining 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 Capstone Mining Corp are associated (or correlated) with Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale Corp has no effect on the direction of Capstone Mining i.e., Capstone Mining and Costco Wholesale go up and down completely randomly.

Pair Corralation between Capstone Mining and Costco Wholesale

Assuming the 90 days horizon Capstone Mining Corp is expected to under-perform the Costco Wholesale. In addition to that, Capstone Mining is 2.39 times more volatile than Costco Wholesale Corp. It trades about -0.11 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.12 per unit of volatility. If you would invest  4,119  in Costco Wholesale Corp on September 27, 2024 and sell it today you would earn a total of  319.00  from holding Costco Wholesale Corp or generate 7.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Capstone Mining Corp  vs.  Costco Wholesale Corp

Capstone Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capstone Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Costco Wholesale Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Costco Wholesale may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Capstone Mining and Costco Wholesale

The main advantage of trading using opposite Capstone Mining and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capstone Mining position performs unexpectedly, Costco Wholesale 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 Costco Wholesale will offset losses from the drop in Costco Wholesale's long position.

The idea behind Capstone Mining Corp and Costco Wholesale Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.