Correlation Between Capital One and Heartland Financial
Can any of the company-specific risk be diversified away by investing in both Capital One and Heartland Financial 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 Heartland Financial 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 Heartland Financial USA, you can compare the effects of market volatilities on Capital One and Heartland Financial 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 Heartland Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and Heartland Financial.
Diversification Opportunities for Capital One and Heartland Financial
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capital and Heartland is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Heartland Financial USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Financial USA 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 Heartland Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Financial USA has no effect on the direction of Capital One i.e., Capital One and Heartland Financial go up and down completely randomly.
Pair Corralation between Capital One and Heartland Financial
Assuming the 90 days trading horizon Capital One Financial is expected to under-perform the Heartland Financial. In addition to that, Capital One is 3.35 times more volatile than Heartland Financial USA. It trades about -0.05 of its total potential returns per unit of risk. Heartland Financial USA is currently generating about 0.12 per unit of volatility. If you would invest 2,512 in Heartland Financial USA on August 24, 2024 and sell it today you would earn a total of 20.00 from holding Heartland Financial USA or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. Heartland Financial USA
Performance |
| Timeline |
| Capital One Financial |
| Heartland Financial USA |
Capital One and Heartland Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and Heartland Financial
The main advantage of trading using opposite Capital One and Heartland Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, Heartland Financial 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 Heartland Financial will offset losses from the drop in Heartland Financial's long position.| Capital One vs. Capital One Financial | Capital One vs. Bank of America | Capital One vs. Wells Fargo | Capital One vs. Bank of America |
| Heartland Financial vs. Capital One Financial | Heartland Financial vs. Capital One Financial | Heartland Financial vs. Bank of America | Heartland Financial vs. KeyCorp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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