Correlation Between Old Republic and Capital Clean

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

By analyzing existing cross correlation between Old Republic International and Capital Clean Energy, you can compare the effects of market volatilities on Old Republic and Capital Clean 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 Old Republic with a short position of Capital Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Capital Clean.

Diversification Opportunities for Old Republic and Capital Clean

0.36

Correlation Coefficient

Old Republic  Capital Clean

Weak diversification

The 3 months correlation between Old and Capital is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and Capital Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Clean Energy and Old Republic 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 Old Republic International are associated (or correlated) with Capital Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Clean Energy has no effect on the direction of Old Republic i.e., Old Republic and Capital Clean go up and down completely randomly.

Pair Corralation between Old Republic and Capital Clean

Considering the 90-day investment horizon Old Republic International is expected to generate 0.62 times more return on investment than Capital Clean. However, Old Republic International is 1.6 times less risky than Capital Clean. It trades about 0.1 of its potential returns per unit of risk. Capital Clean Energy is currently generating about 0.05 per unit of risk. If you would invest  2,157  in Old Republic International on November 29, 2024 and sell it today you would earn a total of  1,627  from holding Old Republic International or generate 75.43% return on investment over 90 days.

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

Old Republic International  vs.  Capital Clean Energy

Old Republic Interna

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Old Republic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Capital Clean Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Clean Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Capital Clean is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Old Republic and Capital Clean

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

The idea behind Old Republic International and Capital Clean Energy 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.