Correlation Between Capstone Mining and Goeasy

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

Diversification Opportunities for Capstone Mining and Goeasy

0.81

Correlation Coefficient

Capstone Mining  Goeasy

Very poor diversification

The 3 months correlation between Capstone and Goeasy is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and goeasy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on goeasy 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 Goeasy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of goeasy has no effect on the direction of Capstone Mining i.e., Capstone Mining and Goeasy go up and down completely randomly.

Pair Corralation between Capstone Mining and Goeasy

Assuming the 90 days horizon Capstone Mining Corp is expected to under-perform the Goeasy. In addition to that, Capstone Mining is 1.51 times more volatile than goeasy. It trades about -0.2 of its total potential returns per unit of risk. goeasy is currently generating about 0.15 per unit of volatility. If you would invest  16,531  in goeasy on October 10, 2024 and sell it today you would earn a total of  628.00  from holding goeasy or generate 3.8% return on investment over 90 days.

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

Capstone Mining Corp  vs.  goeasy

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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

goeasy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days goeasy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Goeasy is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Capstone Mining and Goeasy

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

The idea behind Capstone Mining Corp and goeasy 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.