Correlation Between Equitable Holdings and Capital One
Can any of the company-specific risk be diversified away by investing in both Equitable Holdings 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 Equitable Holdings and Capital One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equitable Holdings and Capital One Financial, you can compare the effects of market volatilities on Equitable Holdings 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 Equitable Holdings with a short position of Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equitable Holdings and Capital One.
Diversification Opportunities for Equitable Holdings and Capital One
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Equitable and Capital is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Equitable Holdings 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 Equitable Holdings 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 Equitable Holdings 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 Equitable Holdings i.e., Equitable Holdings and Capital One go up and down completely randomly.
Pair Corralation between Equitable Holdings and Capital One
Assuming the 90 days trading horizon Equitable Holdings is expected to under-perform the Capital One. But the preferred stock apears to be less risky and, when comparing its historical volatility, Equitable Holdings is 1.21 times less risky than Capital One. The preferred stock trades about -0.12 of its potential returns per unit of risk. The Capital One Financial is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,959 in Capital One Financial on August 27, 2024 and sell it today you would lose (18.00) from holding Capital One Financial or give up 0.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equitable Holdings vs. Capital One Financial
Performance |
| Timeline |
| Equitable Holdings |
| Capital One Financial |
Equitable Holdings and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equitable Holdings and Capital One
The main advantage of trading using opposite Equitable Holdings and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equitable Holdings 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.| Equitable Holdings vs. Capital One Financial | Equitable Holdings vs. Citizens Financial Group | Equitable Holdings vs. Equitable Holdings | Equitable Holdings vs. MetLife Preferred Stock |
| Capital One vs. Capital One Financial | Capital One vs. Wells Fargo | Capital One vs. Bank of America | Capital One vs. Capital One Financial |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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