Correlation Between Capital One and Upstart Holdings
Can any of the company-specific risk be diversified away by investing in both Capital One and Upstart Holdings 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 Upstart Holdings 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 Upstart Holdings, you can compare the effects of market volatilities on Capital One and Upstart Holdings 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 Upstart Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and Upstart Holdings.
Diversification Opportunities for Capital One and Upstart Holdings
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Capital and Upstart is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Upstart Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upstart Holdings 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 Upstart Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upstart Holdings has no effect on the direction of Capital One i.e., Capital One and Upstart Holdings go up and down completely randomly.
Pair Corralation between Capital One and Upstart Holdings
Considering the 90-day investment horizon Capital One is expected to generate 4.13 times less return on investment than Upstart Holdings. But when comparing it to its historical volatility, Capital One Financial is 3.09 times less risky than Upstart Holdings. It trades about 0.11 of its potential returns per unit of risk. Upstart Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,459 in Upstart Holdings on September 5, 2024 and sell it today you would earn a total of 4,819 from holding Upstart Holdings or generate 195.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. Upstart Holdings
Performance |
| Timeline |
| Capital One Financial |
| Upstart Holdings |
Capital One and Upstart Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and Upstart Holdings
The main advantage of trading using opposite Capital One and Upstart Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, Upstart Holdings 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 Upstart Holdings will offset losses from the drop in Upstart Holdings' long position.| Capital One vs. Mastercard | Capital One vs. Visa Class A | Capital One vs. PayPal Holdings | Capital One vs. Ally Financial |
| Upstart Holdings vs. SoFi Technologies | Upstart Holdings vs. Visa Class A | Upstart Holdings vs. Mastercard | Upstart Holdings vs. American Express |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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