Correlation Between Capital One and Bright Horizons
Can any of the company-specific risk be diversified away by investing in both Capital One and Bright Horizons 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 Bright Horizons 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 Bright Horizons Family, you can compare the effects of market volatilities on Capital One and Bright Horizons 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 Bright Horizons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and Bright Horizons.
Diversification Opportunities for Capital One and Bright Horizons
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Capital and Bright is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Bright Horizons Family in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Horizons Family 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 Bright Horizons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Horizons Family has no effect on the direction of Capital One i.e., Capital One and Bright Horizons go up and down completely randomly.
Pair Corralation between Capital One and Bright Horizons
Assuming the 90 days horizon Capital One Financial is expected to generate 0.62 times more return on investment than Bright Horizons. However, Capital One Financial is 1.62 times less risky than Bright Horizons. It trades about -0.04 of its potential returns per unit of risk. Bright Horizons Family is currently generating about -0.02 per unit of risk. If you would invest 17,739 in Capital One Financial on September 13, 2024 and sell it today you would lose (239.00) from holding Capital One Financial or give up 1.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. Bright Horizons Family
Performance |
| Timeline |
| Capital One Financial |
| Bright Horizons Family |
Capital One and Bright Horizons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and Bright Horizons
The main advantage of trading using opposite Capital One and Bright Horizons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, Bright Horizons 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 Bright Horizons will offset losses from the drop in Bright Horizons' long position.| Capital One vs. YOOMA WELLNESS INC | Capital One vs. Cardinal Health | Capital One vs. JAPAN TOBACCO UNSPADR12 | Capital One vs. ULTRA CLEAN HLDGS |
| Bright Horizons vs. Service International | Bright Horizons vs. BOYD GROUP SERVICES | Bright Horizons vs. Frontdoor | Bright Horizons vs. CVS Group plc |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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