Correlation Between Imperial Metals and Capstone Copper

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

By analyzing existing cross correlation between Imperial Metals and Capstone Copper Corp, you can compare the effects of market volatilities on Imperial Metals and Capstone Copper 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 Imperial Metals with a short position of Capstone Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Metals and Capstone Copper.

Diversification Opportunities for Imperial Metals and Capstone Copper

0.85

Correlation Coefficient

Imperial Metals  Capstone Copper

Very poor diversification

The 3 months correlation between Imperial and Capstone is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Metals and Capstone Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Copper Corp and Imperial Metals 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 Imperial Metals are associated (or correlated) with Capstone Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Copper Corp has no effect on the direction of Imperial Metals i.e., Imperial Metals and Capstone Copper go up and down completely randomly.

Pair Corralation between Imperial Metals and Capstone Copper

Assuming the 90 days horizon Imperial Metals is expected to generate 1.39 times more return on investment than Capstone Copper. However, Imperial Metals is 1.39 times more volatile than Capstone Copper Corp. It trades about -0.11 of its potential returns per unit of risk. Capstone Copper Corp is currently generating about -0.4 per unit of risk. If you would invest  147.00  in Imperial Metals on September 21, 2024 and sell it today you would lose (11.00) from holding Imperial Metals or give up 7.48% of portfolio value over 90 days.

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

Imperial Metals  vs.  Capstone Copper Corp

Imperial Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imperial Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Capstone Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capstone Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Imperial Metals and Capstone Copper

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

The idea behind Imperial Metals and Capstone Copper Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.