Correlation Between Capital One and Southern Copper
Can any of the company-specific risk be diversified away by investing in both Capital One and Southern Copper 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 Southern Copper 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 Southern Copper, you can compare the effects of market volatilities on Capital One and Southern Copper 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 Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and Southern Copper.
Diversification Opportunities for Capital One and Southern Copper
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Capital and Southern is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper 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 Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper has no effect on the direction of Capital One i.e., Capital One and Southern Copper go up and down completely randomly.
Pair Corralation between Capital One and Southern Copper
Assuming the 90 days trading horizon Capital One Financial is expected to generate 1.14 times more return on investment than Southern Copper. However, Capital One is 1.14 times more volatile than Southern Copper. It trades about 0.19 of its potential returns per unit of risk. Southern Copper is currently generating about 0.03 per unit of risk. If you would invest 241,029 in Capital One Financial on September 1, 2024 and sell it today you would earn a total of 149,883 from holding Capital One Financial or generate 62.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. Southern Copper
Performance |
| Timeline |
| Capital One Financial |
| Southern Copper |
Capital One and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and Southern Copper
The main advantage of trading using opposite Capital One and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, Southern Copper 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 Southern Copper will offset losses from the drop in Southern Copper's long position.| Capital One vs. Ross Stores | Capital One vs. Grupo Sports World | Capital One vs. Prudential Financial | Capital One vs. Deutsche Bank Aktiengesellschaft |
| Southern Copper vs. Freeport McMoRan | Southern Copper vs. The Select Sector | Southern Copper vs. Promotora y Operadora | Southern Copper vs. iShares Global Timber |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |