Correlation Between Capital One and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both Capital One and BNY Mellon 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 BNY Mellon 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 BNY Mellon Strategic, you can compare the effects of market volatilities on Capital One and BNY Mellon 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 BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and BNY Mellon.
Diversification Opportunities for Capital One and BNY Mellon
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Capital and BNY is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and BNY Mellon Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon Strategic 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 BNY Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNY Mellon Strategic has no effect on the direction of Capital One i.e., Capital One and BNY Mellon go up and down completely randomly.
Pair Corralation between Capital One and BNY Mellon
Considering the 90-day investment horizon Capital One Financial is expected to under-perform the BNY Mellon. In addition to that, Capital One is 6.06 times more volatile than BNY Mellon Strategic. It trades about -0.18 of its total potential returns per unit of risk. BNY Mellon Strategic is currently generating about -0.05 per unit of volatility. If you would invest 622.00 in BNY Mellon Strategic on January 5, 2025 and sell it today you would lose (4.00) from holding BNY Mellon Strategic or give up 0.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. BNY Mellon Strategic
Performance |
| Timeline |
| Capital One Financial |
| BNY Mellon Strategic |
Capital One and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and BNY Mellon
The main advantage of trading using opposite Capital One and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, BNY Mellon 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 BNY Mellon will offset losses from the drop in BNY Mellon's long position.| Capital One vs. Mastercard | Capital One vs. Visa Class A | Capital One vs. PayPal Holdings | Capital One vs. Ally Financial |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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