Correlation Between Capital One and Vista Oil
Can any of the company-specific risk be diversified away by investing in both Capital One and Vista Oil 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 Vista Oil 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 Vista Oil Gas, you can compare the effects of market volatilities on Capital One and Vista Oil 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 Vista Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and Vista Oil.
Diversification Opportunities for Capital One and Vista Oil
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capital and Vista is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Vista Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Oil Gas 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 Vista Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Oil Gas has no effect on the direction of Capital One i.e., Capital One and Vista Oil go up and down completely randomly.
Pair Corralation between Capital One and Vista Oil
Assuming the 90 days trading horizon Capital One is expected to generate 38.41 times less return on investment than Vista Oil. But when comparing it to its historical volatility, Capital One Financial is 2.35 times less risky than Vista Oil. It trades about 0.01 of its potential returns per unit of risk. Vista Oil Gas is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 97,147 in Vista Oil Gas on October 10, 2024 and sell it today you would earn a total of 17,703 from holding Vista Oil Gas or generate 18.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. Vista Oil Gas
Performance |
| Timeline |
| Capital One Financial |
| Vista Oil Gas |
Capital One and Vista Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and Vista Oil
The main advantage of trading using opposite Capital One and Vista Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, Vista Oil 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 Vista Oil will offset losses from the drop in Vista Oil's long position.| Capital One vs. Grupo Industrial Saltillo | Capital One vs. The Bank of | Capital One vs. United Airlines Holdings | Capital One vs. GMxico Transportes 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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