Correlation Between Capella Minerals and District Metals

Can any of the company-specific risk be diversified away by investing in both Capella Minerals and District Metals 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 Capella Minerals and District Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Capella Minerals and District Metals

-0.31

Correlation Coefficient

Capella Minerals  District Metals

Very good diversification

The 3 months correlation between Capella and District is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Capella Minerals and District Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on District Metals Corp and Capella Minerals 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 Capella Minerals are associated (or correlated) with District Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of District Metals Corp has no effect on the direction of Capella Minerals i.e., Capella Minerals and District Metals go up and down completely randomly.

Pair Corralation between Capella Minerals and District Metals

Assuming the 90 days trading horizon Capella Minerals is expected to generate 26.57 times more return on investment than District Metals. However, Capella Minerals is 26.57 times more volatile than District Metals Corp. It trades about 0.17 of its potential returns per unit of risk. District Metals Corp is currently generating about 0.08 per unit of risk. If you would invest  6.00  in Capella Minerals on October 4, 2024 and sell it today you would lose (2.00) from holding Capella Minerals or give up 33.33% of portfolio value over 90 days.

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

Capella Minerals  vs.  District Metals Corp

Capella Minerals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capella Minerals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, Capella Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

District Metals Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in District Metals Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, District Metals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Capella Minerals and District Metals

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

The idea behind Capella Minerals and District Metals 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.