Correlation Between Guaranty Trust and Capital Metals

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

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

Diversification Opportunities for Guaranty Trust and Capital Metals

-0.71

Correlation Coefficient

Guaranty Trust  Capital Metals

Pay attention - limited upside

The 3 months correlation between Guaranty and Capital is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Guaranty Trust Holding and Capital Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Metals PLC and Guaranty Trust 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 Guaranty Trust Holding are associated (or correlated) with Capital Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Metals PLC has no effect on the direction of Guaranty Trust i.e., Guaranty Trust and Capital Metals go up and down completely randomly.

Pair Corralation between Guaranty Trust and Capital Metals

Assuming the 90 days trading horizon Guaranty Trust Holding is expected to generate 1.03 times more return on investment than Capital Metals. However, Guaranty Trust is 1.03 times more volatile than Capital Metals PLC. It trades about 0.06 of its potential returns per unit of risk. Capital Metals PLC is currently generating about -0.06 per unit of risk. If you would invest  182.00  in Guaranty Trust Holding on December 1, 2024 and sell it today you would earn a total of  18.00  from holding Guaranty Trust Holding or generate 9.89% return on investment over 90 days.

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

Guaranty Trust Holding  vs.  Capital Metals PLC

Guaranty Trust Holding

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guaranty Trust Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Guaranty Trust disclosed solid returns over the last few months and may actually be approaching a breakup point.

Capital Metals PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capital Metals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Guaranty Trust and Capital Metals

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

The idea behind Guaranty Trust Holding and Capital Metals PLC 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.