Correlation Between IShares Canadian and Capstone Mining

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

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

Diversification Opportunities for IShares Canadian and Capstone Mining

-0.57

Correlation Coefficient

IShares Canadian  Capstone Mining

Excellent diversification

The 3 months correlation between IShares and Capstone is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding iShares Canadian HYBrid and Capstone Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Mining Corp and IShares Canadian 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 iShares Canadian HYBrid are associated (or correlated) with Capstone Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Mining Corp has no effect on the direction of IShares Canadian i.e., IShares Canadian and Capstone Mining go up and down completely randomly.

Pair Corralation between IShares Canadian and Capstone Mining

Assuming the 90 days trading horizon iShares Canadian HYBrid is expected to generate 0.08 times more return on investment than Capstone Mining. However, iShares Canadian HYBrid is 12.7 times less risky than Capstone Mining. It trades about 0.1 of its potential returns per unit of risk. Capstone Mining Corp is currently generating about -0.01 per unit of risk. If you would invest  1,962  in iShares Canadian HYBrid on December 24, 2024 and sell it today you would earn a total of  34.00  from holding iShares Canadian HYBrid or generate 1.73% return on investment over 90 days.

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

iShares Canadian HYBrid  vs.  Capstone Mining Corp

iShares Canadian HYBrid

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Canadian HYBrid are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, IShares Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Capstone Mining Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with IShares Canadian and Capstone Mining

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

The idea behind iShares Canadian HYBrid and Capstone Mining 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.