Correlation Between Toromont Industries and Capstone Infrastructure

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

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

Diversification Opportunities for Toromont Industries and Capstone Infrastructure

0.81

Correlation Coefficient

Toromont Industries  Capstone Infrastructure

Very poor diversification

The 3 months correlation between Toromont and Capstone is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Toromont Industries and Capstone Infrastructure Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Infrastructure and Toromont Industries 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 Toromont Industries are associated (or correlated) with Capstone Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Infrastructure has no effect on the direction of Toromont Industries i.e., Toromont Industries and Capstone Infrastructure go up and down completely randomly.

Pair Corralation between Toromont Industries and Capstone Infrastructure

Assuming the 90 days trading horizon Toromont Industries is expected to generate 0.85 times more return on investment than Capstone Infrastructure. However, Toromont Industries is 1.18 times less risky than Capstone Infrastructure. It trades about 0.19 of its potential returns per unit of risk. Capstone Infrastructure Corp is currently generating about 0.12 per unit of risk. If you would invest  11,223  in Toromont Industries on April 20, 2025 and sell it today you would earn a total of  1,651  from holding Toromont Industries or generate 14.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Toromont Industries  vs.  Capstone Infrastructure Corp

Toromont Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Toromont Industries are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Toromont Industries displayed solid returns over the last few months and may actually be approaching a breakup point.

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 9 (%) 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.

Pair Trading with Toromont Industries and Capstone Infrastructure

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

The idea behind Toromont Industries and Capstone Infrastructure 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.