Correlation Between Capital One and VFCO34
Can any of the company-specific risk be diversified away by investing in both Capital One and VFCO34 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 VFCO34 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 VFCO34, you can compare the effects of market volatilities on Capital One and VFCO34 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 VFCO34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and VFCO34.
Diversification Opportunities for Capital One and VFCO34
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and VFCO34 is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and VFCO34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VFCO34 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 VFCO34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VFCO34 has no effect on the direction of Capital One i.e., Capital One and VFCO34 go up and down completely randomly.
Pair Corralation between Capital One and VFCO34
Assuming the 90 days trading horizon Capital One is expected to generate 32.88 times less return on investment than VFCO34. But when comparing it to its historical volatility, Capital One Financial is 1.78 times less risky than VFCO34. It trades about 0.01 of its potential returns per unit of risk. VFCO34 is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 6,094 in VFCO34 on September 28, 2024 and sell it today you would earn a total of 689.00 from holding VFCO34 or generate 11.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Capital One Financial vs. VFCO34
Performance |
| Timeline |
| Capital One Financial |
| VFCO34 |
Capital One and VFCO34 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and VFCO34
The main advantage of trading using opposite Capital One and VFCO34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, VFCO34 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 VFCO34 will offset losses from the drop in VFCO34's long position.| Capital One vs. Beyond Meat | Capital One vs. G2D Investments | Capital One vs. Apartment Investment and | Capital One vs. Global X Funds |
| VFCO34 vs. MAHLE Metal Leve | VFCO34 vs. Metalrgica Riosulense SA | VFCO34 vs. Tres Tentos Agroindustrial | VFCO34 vs. Capital One Financial |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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