Correlation Between Capital One and APx Acquisition
Can any of the company-specific risk be diversified away by investing in both Capital One and APx Acquisition 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 APx Acquisition 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 APx Acquisition I, you can compare the effects of market volatilities on Capital One and APx Acquisition 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 APx Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and APx Acquisition.
Diversification Opportunities for Capital One and APx Acquisition
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and APx is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and APx Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APx Acquisition I 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 APx Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APx Acquisition I has no effect on the direction of Capital One i.e., Capital One and APx Acquisition go up and down completely randomly.
Pair Corralation between Capital One and APx Acquisition
Considering the 90-day investment horizon Capital One Financial is expected to generate 3.66 times more return on investment than APx Acquisition. However, Capital One is 3.66 times more volatile than APx Acquisition I. It trades about 0.1 of its potential returns per unit of risk. APx Acquisition I is currently generating about 0.1 per unit of risk. If you would invest 10,211 in Capital One Financial on September 12, 2024 and sell it today you would earn a total of 8,172 from holding Capital One Financial or generate 80.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. APx Acquisition I
Performance |
| Timeline |
| Capital One Financial |
| APx Acquisition I |
Capital One and APx Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and APx Acquisition
The main advantage of trading using opposite Capital One and APx Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, APx Acquisition 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 APx Acquisition will offset losses from the drop in APx Acquisition's long position.| Capital One vs. Victory Integrity Smallmid Cap | Capital One vs. Hilton Worldwide Holdings | Capital One vs. NVIDIA | Capital One vs. JPMorgan Chase Co |
| APx Acquisition vs. HUMANA INC | APx Acquisition vs. Barloworld Ltd ADR | APx Acquisition vs. Morningstar Unconstrained Allocation | APx Acquisition vs. Thrivent High Yield |
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 CEOs Directory module to screen CEOs from public companies around the world.
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