Correlation Between Capital One and ATT
Can any of the company-specific risk be diversified away by investing in both Capital One and ATT 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 ATT 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 ATT Inc, you can compare the effects of market volatilities on Capital One and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and ATT.
Diversification Opportunities for Capital One and ATT
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capital and ATT is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Capital One i.e., Capital One and ATT go up and down completely randomly.
Pair Corralation between Capital One and ATT
Assuming the 90 days trading horizon Capital One Financial is expected to generate 1.36 times more return on investment than ATT. However, Capital One is 1.36 times more volatile than ATT Inc. It trades about 0.15 of its potential returns per unit of risk. ATT Inc is currently generating about -0.11 per unit of risk. If you would invest 1,932 in Capital One Financial on September 1, 2024 and sell it today you would earn a total of 64.00 from holding Capital One Financial or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Capital One Financial vs. ATT Inc
Performance |
| Timeline |
| Capital One Financial |
| ATT Inc |
Capital One and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and ATT
The main advantage of trading using opposite Capital One and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.| Capital One vs. Capital One Financial | Capital One vs. Citizens Financial Group | Capital One vs. Wells Fargo | Capital One vs. Equitable Holdings |
| ATT vs. Telephone and Data | ATT vs. Telephone and Data | ATT vs. Palantir Technologies Class | ATT vs. Walmart |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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