Correlation Between Capitol Series and WGRO

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

By analyzing existing cross correlation between Capitol Series Trust and WGRO, you can compare the effects of market volatilities on Capitol Series and WGRO 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 Capitol Series with a short position of WGRO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Series and WGRO.

Diversification Opportunities for Capitol Series and WGRO

0.83

Correlation Coefficient

Capitol Series  WGRO

Very poor diversification

The 3 months correlation between Capitol and WGRO is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Series Trust and WGRO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WGRO and Capitol Series 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 Capitol Series Trust are associated (or correlated) with WGRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WGRO has no effect on the direction of Capitol Series i.e., Capitol Series and WGRO go up and down completely randomly.

Pair Corralation between Capitol Series and WGRO

Considering the 90-day investment horizon Capitol Series Trust is expected to generate 11.13 times more return on investment than WGRO. However, Capitol Series is 11.13 times more volatile than WGRO. It trades about 0.06 of its potential returns per unit of risk. WGRO is currently generating about 0.09 per unit of risk. If you would invest  1,300  in Capitol Series Trust on September 18, 2024 and sell it today you would earn a total of  8,860  from holding Capitol Series Trust or generate 681.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	28.83%
Values	Daily Returns

Capitol Series Trust  vs.  WGRO

Capitol Series Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Series Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Capitol Series exhibited solid returns over the last few months and may actually be approaching a breakup point.

WGRO

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Capitol Series and WGRO

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

The idea behind Capitol Series Trust and WGRO 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.