Correlation Between Capital One and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both Capital One and AstraZeneca PLC 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 Capital One and AstraZeneca PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital One Financial and AstraZeneca PLC, you can compare the effects of market volatilities on Capital One and AstraZeneca PLC 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 Capital One with a short position of AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and AstraZeneca PLC.
Diversification Opportunities for Capital One and AstraZeneca PLC
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Capital and AstraZeneca is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC and Capital One 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 Capital One Financial are associated (or correlated) with AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC has no effect on the direction of Capital One i.e., Capital One and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between Capital One and AstraZeneca PLC
Assuming the 90 days trading horizon Capital One Financial is expected to generate 2.02 times more return on investment than AstraZeneca PLC. However, Capital One is 2.02 times more volatile than AstraZeneca PLC. It trades about 0.28 of its potential returns per unit of risk. AstraZeneca PLC is currently generating about 0.15 per unit of risk. If you would invest 47,232 in Capital One Financial on September 13, 2024 and sell it today you would earn a total of 9,540 from holding Capital One Financial or generate 20.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Capital One Financial vs. AstraZeneca PLC
Performance |
| Timeline |
| Capital One Financial |
| AstraZeneca PLC |
Capital One and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and AstraZeneca PLC
The main advantage of trading using opposite Capital One and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.| Capital One vs. PayPal Holdings | Capital One vs. Credit Acceptance | Capital One vs. Bread Financial Holdings | Capital One vs. Financeira Alfa SA |
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Check out your portfolio center.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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