Correlation Between Capstone Mining and Caribbean Utilities
Can any of the company-specific risk be diversified away by investing in both Capstone Mining and Caribbean Utilities 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 Caribbean Utilities 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 Caribbean Utilities, you can compare the effects of market volatilities on Capstone Mining and Caribbean Utilities 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 Caribbean Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capstone Mining and Caribbean Utilities.
Diversification Opportunities for Capstone Mining and Caribbean Utilities
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Capstone and Caribbean is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and Caribbean Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caribbean Utilities 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 Caribbean Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caribbean Utilities has no effect on the direction of Capstone Mining i.e., Capstone Mining and Caribbean Utilities go up and down completely randomly.
Pair Corralation between Capstone Mining and Caribbean Utilities
Assuming the 90 days horizon Capstone Mining Corp is expected to generate 2.27 times more return on investment than Caribbean Utilities. However, Capstone Mining is 2.27 times more volatile than Caribbean Utilities. It trades about 0.1 of its potential returns per unit of risk. Caribbean Utilities is currently generating about 0.02 per unit of risk. If you would invest 815.00 in Capstone Mining Corp on September 7, 2024 and sell it today you would earn a total of 124.00 from holding Capstone Mining Corp or generate 15.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.44% |
Values | Daily Returns |
Capstone Mining Corp vs. Caribbean Utilities
Performance |
Timeline |
Capstone Mining Corp |
Caribbean Utilities |
Capstone Mining and Caribbean Utilities Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Capstone Mining and Caribbean Utilities
The main advantage of trading using opposite Capstone Mining and Caribbean Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capstone Mining position performs unexpectedly, Caribbean Utilities 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 Caribbean Utilities will offset losses from the drop in Caribbean Utilities' long position.Capstone Mining vs. Globex Mining Enterprises | Capstone Mining vs. Silver Range Resources | Capstone Mining vs. Orestone Mining Corp | Capstone Mining vs. Silver Elephant Mining |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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