Correlation Between Wolfspeed and Capstone Copper

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

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

Diversification Opportunities for Wolfspeed and Capstone Copper

-0.23

Correlation Coefficient

Wolfspeed  Capstone Copper

Very good diversification

The 3 months correlation between Wolfspeed and Capstone is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Wolfspeed and Capstone Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Copper Corp and Wolfspeed 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 Wolfspeed are associated (or correlated) with Capstone Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Copper Corp has no effect on the direction of Wolfspeed i.e., Wolfspeed and Capstone Copper go up and down completely randomly.

Pair Corralation between Wolfspeed and Capstone Copper

Given the investment horizon of 90 days Wolfspeed is expected to generate 7.83 times more return on investment than Capstone Copper. However, Wolfspeed is 7.83 times more volatile than Capstone Copper Corp. It trades about 0.03 of its potential returns per unit of risk. Capstone Copper Corp is currently generating about 0.15 per unit of risk. If you would invest  381.00  in Wolfspeed on May 15, 2025 and sell it today you would lose (239.00) from holding Wolfspeed or give up 62.73% of portfolio value over 90 days.

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

Wolfspeed  vs.  Capstone Copper Corp

Wolfspeed

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wolfspeed are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, Wolfspeed reported solid returns over the last few months and may actually be approaching a breakup point.

Capstone Copper Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Copper Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Capstone Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wolfspeed and Capstone Copper

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

The idea behind Wolfspeed and Capstone Copper 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.