Correlation Between Capital One and WesBanco
Can any of the company-specific risk be diversified away by investing in both Capital One and WesBanco 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 WesBanco 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 WesBanco, you can compare the effects of market volatilities on Capital One and WesBanco 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 WesBanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and WesBanco.
Diversification Opportunities for Capital One and WesBanco
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capital and WesBanco is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and WesBanco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesBanco 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 WesBanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesBanco has no effect on the direction of Capital One i.e., Capital One and WesBanco go up and down completely randomly.
Pair Corralation between Capital One and WesBanco
Assuming the 90 days trading horizon Capital One is expected to generate 2.48 times less return on investment than WesBanco. In addition to that, Capital One is 1.86 times more volatile than WesBanco. It trades about 0.03 of its total potential returns per unit of risk. WesBanco is currently generating about 0.12 per unit of volatility. If you would invest 2,262 in WesBanco on August 27, 2024 and sell it today you would earn a total of 262.00 from holding WesBanco or generate 11.58% 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. WesBanco
Performance |
| Timeline |
| Capital One Financial |
| WesBanco |
Capital One and WesBanco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and WesBanco
The main advantage of trading using opposite Capital One and WesBanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, WesBanco 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 WesBanco will offset losses from the drop in WesBanco'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 |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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