Correlation Between Capital One and Fibra UNO
Can any of the company-specific risk be diversified away by investing in both Capital One and Fibra UNO 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 Fibra UNO 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 Fibra UNO, you can compare the effects of market volatilities on Capital One and Fibra UNO 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 Fibra UNO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and Fibra UNO.
Diversification Opportunities for Capital One and Fibra UNO
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Capital and Fibra is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Fibra UNO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra UNO 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 Fibra UNO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra UNO has no effect on the direction of Capital One i.e., Capital One and Fibra UNO go up and down completely randomly.
Pair Corralation between Capital One and Fibra UNO
Assuming the 90 days trading horizon Capital One Financial is expected to generate 3.63 times more return on investment than Fibra UNO. However, Capital One is 3.63 times more volatile than Fibra UNO. It trades about 0.2 of its potential returns per unit of risk. Fibra UNO is currently generating about -0.49 per unit of risk. If you would invest 336,754 in Capital One Financial on August 31, 2024 and sell it today you would earn a total of 46,232 from holding Capital One Financial or generate 13.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. Fibra UNO
Performance |
| Timeline |
| Capital One Financial |
| Fibra UNO |
Capital One and Fibra UNO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and Fibra UNO
The main advantage of trading using opposite Capital One and Fibra UNO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, Fibra UNO 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 Fibra UNO will offset losses from the drop in Fibra UNO's long position.| Capital One vs. Applied Materials | Capital One vs. FibraHotel | Capital One vs. Grupo Carso SAB | Capital One vs. Verizon Communications |
| Fibra UNO vs. Grupo Sports World | Fibra UNO vs. Micron Technology | Fibra UNO vs. McEwen Mining | Fibra UNO vs. Capital One 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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