Correlation Between Credit Acceptance and Capital One
Can any of the company-specific risk be diversified away by investing in both Credit Acceptance 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 Credit Acceptance and Capital One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Acceptance and Capital One Financial, you can compare the effects of market volatilities on Credit Acceptance 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 Credit Acceptance with a short position of Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Acceptance and Capital One.
Diversification Opportunities for Credit Acceptance and Capital One
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Credit and Capital is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Credit Acceptance 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 Credit Acceptance 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 Credit Acceptance 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 Credit Acceptance i.e., Credit Acceptance and Capital One go up and down completely randomly.
Pair Corralation between Credit Acceptance and Capital One
Assuming the 90 days trading horizon Credit Acceptance is expected to generate 3.11 times less return on investment than Capital One. But when comparing it to its historical volatility, Credit Acceptance is 1.29 times less risky than Capital One. It trades about 0.04 of its potential returns per unit of risk. Capital One Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 28,756 in Capital One Financial on August 27, 2024 and sell it today you would earn a total of 25,148 from holding Capital One Financial or generate 87.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Credit Acceptance vs. Capital One Financial
Performance |
| Timeline |
| Credit Acceptance |
| Capital One Financial |
Credit Acceptance and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Acceptance and Capital One
The main advantage of trading using opposite Credit Acceptance and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Acceptance 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.| Credit Acceptance vs. Capital One Financial | Credit Acceptance vs. Bread Financial Holdings | Credit Acceptance vs. Fras le SA | Credit Acceptance vs. Clave Indices De |
| Capital One vs. Bread Financial Holdings | Capital One vs. Fras le SA | Capital One vs. Clave Indices De | Capital One vs. BTG Pactual Logstica |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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