Correlation Between Cooper Companies and Capital One
Can any of the company-specific risk be diversified away by investing in both Cooper Companies and Capital One 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 Cooper Companies and Capital One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Cooper Companies and Capital One Financial, you can compare the effects of market volatilities on Cooper Companies and Capital One 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 Cooper Companies with a short position of Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cooper Companies and Capital One.
Diversification Opportunities for Cooper Companies and Capital One
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cooper and Capital is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding The Cooper Companies and Capital One Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital One Financial and Cooper Companies 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 The Cooper Companies are associated (or correlated) with Capital One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital One Financial has no effect on the direction of Cooper Companies i.e., Cooper Companies and Capital One go up and down completely randomly.
Pair Corralation between Cooper Companies and Capital One
Assuming the 90 days trading horizon The Cooper Companies is expected to under-perform the Capital One. But the stock apears to be less risky and, when comparing its historical volatility, The Cooper Companies is 5.31 times less risky than Capital One. The stock trades about -0.22 of its potential returns per unit of risk. The Capital One Financial is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 327,334 in Capital One Financial on September 2, 2024 and sell it today you would earn a total of 63,578 from holding Capital One Financial or generate 19.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
The Cooper Companies vs. Capital One Financial
Performance |
| Timeline |
| Cooper Companies |
| Capital One Financial |
Cooper Companies and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cooper Companies and Capital One
The main advantage of trading using opposite Cooper Companies and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cooper Companies position performs unexpectedly, Capital One 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 Capital One will offset losses from the drop in Capital One's long position.| Cooper Companies vs. Micron Technology | Cooper Companies vs. DXC Technology | Cooper Companies vs. FIBRA Storage | Cooper Companies vs. Ross Stores |
| Capital One vs. Monster Beverage Corp | Capital One vs. UnitedHealth Group Incorporated | Capital One vs. Southwest Airlines | Capital One vs. Grupo Carso 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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