Correlation Between Capstone Infrastructure and Transalta

Can any of the company-specific risk be diversified away by investing in both Capstone Infrastructure and Transalta 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 Transalta 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 Transalta A Cum, you can compare the effects of market volatilities on Capstone Infrastructure and Transalta 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 Transalta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capstone Infrastructure and Transalta.

Diversification Opportunities for Capstone Infrastructure and Transalta

0.88

Correlation Coefficient

Capstone Infrastructure  Transalta

Very poor diversification

The 3 months correlation between Capstone and Transalta is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Infrastructure Corp and Transalta A Cum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transalta A Cum 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 Transalta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transalta A Cum has no effect on the direction of Capstone Infrastructure i.e., Capstone Infrastructure and Transalta go up and down completely randomly.

Pair Corralation between Capstone Infrastructure and Transalta

Assuming the 90 days trading horizon Capstone Infrastructure is expected to generate 1.41 times less return on investment than Transalta. In addition to that, Capstone Infrastructure is 1.71 times more volatile than Transalta A Cum. It trades about 0.13 of its total potential returns per unit of risk. Transalta A Cum is currently generating about 0.31 per unit of volatility. If you would invest  1,489  in Transalta A Cum on April 23, 2025 and sell it today you would earn a total of  254.00  from holding Transalta A Cum or generate 17.06% return on investment over 90 days.

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

Capstone Infrastructure Corp  vs.  Transalta A Cum

Capstone Infrastructure

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Infrastructure Corp are ranked lower than 10 (%) 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.

Transalta A Cum

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transalta A Cum are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Transalta unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capstone Infrastructure and Transalta

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

The idea behind Capstone Infrastructure Corp and Transalta A Cum 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.