Correlation Between Diversified Royalty and Capstone Mining

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

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

Diversification Opportunities for Diversified Royalty and Capstone Mining

0.81

Correlation Coefficient

Diversified Royalty  Capstone Mining

Very poor diversification

The 3 months correlation between Diversified and Capstone is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Diversified Royalty Corp 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 Diversified Royalty 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 Diversified Royalty Corp 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 Diversified Royalty i.e., Diversified Royalty and Capstone Mining go up and down completely randomly.

Pair Corralation between Diversified Royalty and Capstone Mining

Assuming the 90 days trading horizon Diversified Royalty is expected to generate 4.66 times less return on investment than Capstone Mining. But when comparing it to its historical volatility, Diversified Royalty Corp is 3.52 times less risky than Capstone Mining. It trades about 0.13 of its potential returns per unit of risk. Capstone Mining Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  791.00  in Capstone Mining Corp on July 20, 2025 and sell it today you would earn a total of  320.00  from holding Capstone Mining Corp or generate 40.46% return on investment over 90 days.

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

Diversified Royalty Corp  vs.  Capstone Mining Corp

Diversified Royalty Corp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Diversified Royalty Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Diversified Royalty may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Capstone Mining Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Mining Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Capstone Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Diversified Royalty and Capstone Mining

The main advantage of trading using opposite Diversified Royalty and Capstone Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified Royalty 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 Diversified Royalty Corp 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.

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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.