Correlation Between Capital One and Capital One
Can any of the company-specific risk be diversified away by investing in both Capital One and Capital One 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 Capital One 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 Capital One Financial, you can compare the effects of market volatilities on Capital One and Capital One 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 Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and Capital One.
Diversification Opportunities for Capital One and Capital One
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Capital and Capital is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Capital One Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital One Financial 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 Capital One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital One Financial has no effect on the direction of Capital One i.e., Capital One and Capital One go up and down completely randomly.
Pair Corralation between Capital One and Capital One
Assuming the 90 days trading horizon Capital One Financial is expected to generate 1.19 times more return on investment than Capital One. However, Capital One is 1.19 times more volatile than Capital One Financial. It trades about 0.0 of its potential returns per unit of risk. Capital One Financial is currently generating about -0.01 per unit of risk. If you would invest 1,859 in Capital One Financial on August 28, 2024 and sell it today you would lose (10.00) from holding Capital One Financial or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. Capital One Financial
Performance |
| Timeline |
| Capital One Financial |
| Capital One Financial |
Capital One and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and Capital One
The main advantage of trading using opposite Capital One and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, Capital One 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 Capital One will offset losses from the drop in Capital One's long position.| Capital One vs. Capital One Financial | Capital One vs. Capital One Financial | Capital One vs. JPMorgan Chase Co |
| Capital One vs. Capital One Financial | Capital One vs. Capital One Financial | Capital One vs. JPMorgan Chase Co |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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