Correlation Between Capital One and NOW
Can any of the company-specific risk be diversified away by investing in both Capital One and NOW 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 NOW 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 NOW Inc, you can compare the effects of market volatilities on Capital One and NOW 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 NOW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and NOW.
Diversification Opportunities for Capital One and NOW
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Capital and NOW is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and NOW Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOW 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 NOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOW Inc has no effect on the direction of Capital One i.e., Capital One and NOW go up and down completely randomly.
Pair Corralation between Capital One and NOW
If you would invest 327,334 in Capital One Financial on September 2, 2024 and sell it today you would earn a total of 63,578 from holding Capital One Financial or generate 19.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Capital One Financial vs. NOW Inc
Performance |
| Timeline |
| Capital One Financial |
| NOW Inc |
Capital One and NOW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and NOW
The main advantage of trading using opposite Capital One and NOW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, NOW 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 NOW will offset losses from the drop in NOW's long position.| Capital One vs. Monster Beverage Corp | Capital One vs. UnitedHealth Group Incorporated | Capital One vs. Southwest Airlines | Capital One vs. Grupo Carso SAB |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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