Correlation Between I 80 and Capitan Mining

Can any of the company-specific risk be diversified away by investing in both I 80 and Capitan Mining 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 I 80 and Capitan Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between i 80 Gold Corp and Capitan Mining, you can compare the effects of market volatilities on I 80 and Capitan Mining 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 I 80 with a short position of Capitan Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of I 80 and Capitan Mining.

Diversification Opportunities for I 80 and Capitan Mining

-0.7

Correlation Coefficient

I 80  Capitan Mining

Excellent diversification

The 3 months correlation between IAU and Capitan is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding i 80 Gold Corp and Capitan Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitan Mining and I 80 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 i 80 Gold Corp are associated (or correlated) with Capitan Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitan Mining has no effect on the direction of I 80 i.e., I 80 and Capitan Mining go up and down completely randomly.

Pair Corralation between I 80 and Capitan Mining

Assuming the 90 days trading horizon i 80 Gold Corp is expected to under-perform the Capitan Mining. But the stock apears to be less risky and, when comparing its historical volatility, i 80 Gold Corp is 1.31 times less risky than Capitan Mining. The stock trades about -0.05 of its potential returns per unit of risk. The Capitan Mining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Capitan Mining on September 21, 2024 and sell it today you would earn a total of  4.00  from holding Capitan Mining or generate 15.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

i 80 Gold Corp  vs.  Capitan Mining

i 80 Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days i 80 Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Capitan Mining

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Capitan Mining are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Capitan Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with I 80 and Capitan Mining

The main advantage of trading using opposite I 80 and Capitan Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I 80 position performs unexpectedly, Capitan Mining 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 Capitan Mining will offset losses from the drop in Capitan Mining's long position.

The idea behind i 80 Gold Corp and Capitan Mining 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.