Correlation Between Capital One and Old National
Can any of the company-specific risk be diversified away by investing in both Capital One and Old National 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 Old National 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 Old National Bancorp, you can compare the effects of market volatilities on Capital One and Old National 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 Old National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and Old National.
Diversification Opportunities for Capital One and Old National
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capital and Old is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Old National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old National Bancorp 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 Old National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old National Bancorp has no effect on the direction of Capital One i.e., Capital One and Old National go up and down completely randomly.
Pair Corralation between Capital One and Old National
Assuming the 90 days trading horizon Capital One Financial is expected to under-perform the Old National. In addition to that, Capital One is 1.53 times more volatile than Old National Bancorp. It trades about -0.01 of its total potential returns per unit of risk. Old National Bancorp is currently generating about 0.01 per unit of volatility. If you would invest 2,518 in Old National Bancorp on August 31, 2024 and sell it today you would earn a total of 1.00 from holding Old National Bancorp or generate 0.04% 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. Old National Bancorp
Performance |
| Timeline |
| Capital One Financial |
| Old National Bancorp |
Capital One and Old National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and Old National
The main advantage of trading using opposite Capital One and Old National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, Old National 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 Old National will offset losses from the drop in Old National's long position.| Capital One vs. Capital One Financial | Capital One vs. Wells Fargo | Capital One vs. Bank of America | Capital One vs. Capital One Financial |
| Old National vs. Old National Bancorp | Old National vs. Washington Federal | Old National vs. Heartland Financial USA | Old National vs. CNB 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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