Correlation Between Capstone Mining and Sprott Physical

Can any of the company-specific risk be diversified away by investing in both Capstone Mining and Sprott Physical 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 Sprott Physical 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 Sprott Physical Gold, you can compare the effects of market volatilities on Capstone Mining and Sprott Physical 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 Sprott Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capstone Mining and Sprott Physical.

Diversification Opportunities for Capstone Mining and Sprott Physical

0.37

Correlation Coefficient

Capstone Mining  Sprott Physical

Weak diversification

The 3 months correlation between Capstone and Sprott is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and Sprott Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Gold 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 Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Gold has no effect on the direction of Capstone Mining i.e., Capstone Mining and Sprott Physical go up and down completely randomly.

Pair Corralation between Capstone Mining and Sprott Physical

Assuming the 90 days horizon Capstone Mining Corp is expected to under-perform the Sprott Physical. In addition to that, Capstone Mining is 2.06 times more volatile than Sprott Physical Gold. It trades about -0.09 of its total potential returns per unit of risk. Sprott Physical Gold is currently generating about -0.02 per unit of volatility. If you would invest  2,605  in Sprott Physical Gold on October 26, 2024 and sell it today you would lose (63.00) from holding Sprott Physical Gold or give up 2.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Capstone Mining Corp  vs.  Sprott Physical Gold

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 uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Sprott Physical Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Physical Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sprott Physical is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Capstone Mining and Sprott Physical

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

The idea behind Capstone Mining Corp and Sprott Physical Gold 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.