Correlation Between FinVolution and Capital One
Can any of the company-specific risk be diversified away by investing in both FinVolution 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 FinVolution and Capital One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FinVolution Group and Capital One Financial, you can compare the effects of market volatilities on FinVolution 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 FinVolution with a short position of Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of FinVolution and Capital One.
Diversification Opportunities for FinVolution and Capital One
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FinVolution and Capital is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding FinVolution Group 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 FinVolution 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 FinVolution Group 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 FinVolution i.e., FinVolution and Capital One go up and down completely randomly.
Pair Corralation between FinVolution and Capital One
Given the investment horizon of 90 days FinVolution is expected to generate 1.75 times less return on investment than Capital One. In addition to that, FinVolution is 1.03 times more volatile than Capital One Financial. It trades about 0.05 of its total potential returns per unit of risk. Capital One Financial is currently generating about 0.08 per unit of volatility. If you would invest 9,136 in Capital One Financial on August 24, 2024 and sell it today you would earn a total of 9,570 from holding Capital One Financial or generate 104.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FinVolution Group vs. Capital One Financial
Performance |
| Timeline |
| FinVolution Group |
| Capital One Financial |
FinVolution and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FinVolution and Capital One
The main advantage of trading using opposite FinVolution and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FinVolution 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.| FinVolution vs. 360 Finance | FinVolution vs. Lufax Holding | FinVolution vs. Qudian Inc | FinVolution vs. X Financial Class |
| Capital One vs. Mastercard | Capital One vs. Visa Class A | Capital One vs. PayPal Holdings | Capital One vs. Ally 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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