Correlation Between Blue Moon and Capital Clean

Can any of the company-specific risk be diversified away by investing in both Blue Moon and Capital Clean 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 Blue Moon and Capital Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blue Moon Metals and Capital Clean Energy, you can compare the effects of market volatilities on Blue Moon and Capital Clean 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 Blue Moon with a short position of Capital Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Moon and Capital Clean.

Diversification Opportunities for Blue Moon and Capital Clean

0.19

Correlation Coefficient

Blue Moon  Capital Clean

Average diversification

The 3 months correlation between Blue and Capital is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Blue Moon Metals and Capital Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Clean Energy and Blue Moon 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 Blue Moon Metals are associated (or correlated) with Capital Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Clean Energy has no effect on the direction of Blue Moon i.e., Blue Moon and Capital Clean go up and down completely randomly.

Pair Corralation between Blue Moon and Capital Clean

Assuming the 90 days horizon Blue Moon Metals is expected to generate 0.54 times more return on investment than Capital Clean. However, Blue Moon Metals is 1.85 times less risky than Capital Clean. It trades about 0.22 of its potential returns per unit of risk. Capital Clean Energy is currently generating about 0.04 per unit of risk. If you would invest  24.00  in Blue Moon Metals on September 23, 2024 and sell it today you would earn a total of  1.00  from holding Blue Moon Metals or generate 4.17% return on investment over 90 days.

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

Blue Moon Metals  vs.  Capital Clean Energy

Blue Moon Metals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Moon Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Blue Moon reported solid returns over the last few months and may actually be approaching a breakup point.

Capital Clean Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Clean Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Capital Clean may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blue Moon and Capital Clean

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

The idea behind Blue Moon Metals and Capital Clean Energy 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.