Correlation Between Capital One and Credit Acceptance
Can any of the company-specific risk be diversified away by investing in both Capital One and Credit Acceptance 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 Credit Acceptance 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 Credit Acceptance, you can compare the effects of market volatilities on Capital One and Credit Acceptance 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 Credit Acceptance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and Credit Acceptance.
Diversification Opportunities for Capital One and Credit Acceptance
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Capital and Credit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Credit Acceptance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Acceptance 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 Credit Acceptance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Acceptance has no effect on the direction of Capital One i.e., Capital One and Credit Acceptance go up and down completely randomly.
Pair Corralation between Capital One and Credit Acceptance
If you would invest 40,857 in Capital One Financial on November 2, 2024 and sell it today you would earn a total of 19,479 from holding Capital One Financial or generate 47.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. Credit Acceptance
Performance |
| Timeline |
| Capital One Financial |
| Credit Acceptance |
Capital One and Credit Acceptance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and Credit Acceptance
The main advantage of trading using opposite Capital One and Credit Acceptance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, Credit Acceptance 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 Credit Acceptance will offset losses from the drop in Credit Acceptance's long position.| Capital One vs. United Natural Foods, | Capital One vs. Ares Management | Capital One vs. Pentair plc | Capital One vs. MAHLE Metal Leve |
| Credit Acceptance vs. salesforce inc | Credit Acceptance vs. Nordon Indstrias Metalrgicas | Credit Acceptance vs. MAHLE Metal Leve | Credit Acceptance vs. Taiwan Semiconductor Manufacturing |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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