Correlation Between Capital One and SLM Corp
Can any of the company-specific risk be diversified away by investing in both Capital One and SLM Corp 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 SLM Corp 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 SLM Corp Pb, you can compare the effects of market volatilities on Capital One and SLM Corp 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 SLM Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and SLM Corp.
Diversification Opportunities for Capital One and SLM Corp
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capital and SLM is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and SLM Corp Pb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLM Corp Pb 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 SLM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLM Corp Pb has no effect on the direction of Capital One i.e., Capital One and SLM Corp go up and down completely randomly.
Pair Corralation between Capital One and SLM Corp
Assuming the 90 days trading horizon Capital One Financial is expected to under-perform the SLM Corp. In addition to that, Capital One is 3.25 times more volatile than SLM Corp Pb. It trades about -0.04 of its total potential returns per unit of risk. SLM Corp Pb is currently generating about 0.22 per unit of volatility. If you would invest 7,390 in SLM Corp Pb on August 27, 2024 and sell it today you would earn a total of 104.00 from holding SLM Corp Pb or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. SLM Corp Pb
Performance |
| Timeline |
| Capital One Financial |
| SLM Corp Pb |
Capital One and SLM Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and SLM Corp
The main advantage of trading using opposite Capital One and SLM Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, SLM Corp 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 SLM Corp will offset losses from the drop in SLM Corp'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 |
| SLM Corp vs. Associates First Capital | SLM Corp vs. Federal Agricultural Mortgage | SLM Corp vs. Federal Agricultural Mortgage | SLM Corp vs. Federal Agricultural Mortgage |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |