Correlation Between Capital One and Lion Group
Can any of the company-specific risk be diversified away by investing in both Capital One and Lion Group 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 Lion Group 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 Lion Group Holding, you can compare the effects of market volatilities on Capital One and Lion Group 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 Lion Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and Lion Group.
Diversification Opportunities for Capital One and Lion Group
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Capital and Lion is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Lion Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Group Holding 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 Lion Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Group Holding has no effect on the direction of Capital One i.e., Capital One and Lion Group go up and down completely randomly.
Pair Corralation between Capital One and Lion Group
Considering the 90-day investment horizon Capital One Financial is expected to generate 0.43 times more return on investment than Lion Group. However, Capital One Financial is 2.34 times less risky than Lion Group. It trades about 0.19 of its potential returns per unit of risk. Lion Group Holding is currently generating about -0.01 per unit of risk. If you would invest 13,710 in Capital One Financial on September 12, 2024 and sell it today you would earn a total of 4,683 from holding Capital One Financial or generate 34.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. Lion Group Holding
Performance |
| Timeline |
| Capital One Financial |
| Lion Group Holding |
Capital One and Lion Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and Lion Group
The main advantage of trading using opposite Capital One and Lion Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, Lion Group 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 Lion Group will offset losses from the drop in Lion Group'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 |
| Lion Group vs. Top KingWin Ltd | Lion Group vs. Magic Empire Global | Lion Group vs. Netcapital | Lion Group vs. Mercurity Fintech Holding |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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