Correlation Between Capstone Infrastructure and PALO ALTO

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

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

Diversification Opportunities for Capstone Infrastructure and PALO ALTO

0.61

Correlation Coefficient

Capstone Infrastructure  PALO ALTO

Poor diversification

The 3 months correlation between Capstone and PALO is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Infrastructure Corp and PALO ALTO NETWORKS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PALO ALTO NETWORKS and Capstone Infrastructure 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 Capstone Infrastructure Corp are associated (or correlated) with PALO ALTO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PALO ALTO NETWORKS has no effect on the direction of Capstone Infrastructure i.e., Capstone Infrastructure and PALO ALTO go up and down completely randomly.

Pair Corralation between Capstone Infrastructure and PALO ALTO

Assuming the 90 days trading horizon Capstone Infrastructure Corp is expected to generate 0.72 times more return on investment than PALO ALTO. However, Capstone Infrastructure Corp is 1.38 times less risky than PALO ALTO. It trades about 0.14 of its potential returns per unit of risk. PALO ALTO NETWORKS is currently generating about 0.1 per unit of risk. If you would invest  1,528  in Capstone Infrastructure Corp on April 24, 2025 and sell it today you would earn a total of  192.00  from holding Capstone Infrastructure Corp or generate 12.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Capstone Infrastructure Corp  vs.  PALO ALTO NETWORKS

Capstone Infrastructure

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Infrastructure Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Capstone Infrastructure may actually be approaching a critical reversion point that can send shares even higher in August 2025.

PALO ALTO NETWORKS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PALO ALTO NETWORKS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, PALO ALTO may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Capstone Infrastructure and PALO ALTO

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

The idea behind Capstone Infrastructure Corp and PALO ALTO NETWORKS 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.