Correlation Between Loews Corp and Capital One
Can any of the company-specific risk be diversified away by investing in both Loews Corp 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 Loews Corp and Capital One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loews Corp and Capital One Financial, you can compare the effects of market volatilities on Loews Corp 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 Loews Corp with a short position of Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loews Corp and Capital One.
Diversification Opportunities for Loews Corp and Capital One
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Loews and Capital is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Loews Corp 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 Loews Corp 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 Loews Corp 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 Loews Corp i.e., Loews Corp and Capital One go up and down completely randomly.
Pair Corralation between Loews Corp and Capital One
Taking into account the 90-day investment horizon Loews Corp is expected to generate 1.77 times more return on investment than Capital One. However, Loews Corp is 1.77 times more volatile than Capital One Financial. It trades about 0.19 of its potential returns per unit of risk. Capital One Financial is currently generating about -0.04 per unit of risk. If you would invest 8,062 in Loews Corp on August 27, 2024 and sell it today you would earn a total of 545.00 from holding Loews Corp or generate 6.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loews Corp vs. Capital One Financial
Performance |
| Timeline |
| Loews Corp |
| Capital One Financial |
Loews Corp and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loews Corp and Capital One
The main advantage of trading using opposite Loews Corp and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loews Corp 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.| Loews Corp vs. Horace Mann Educators | Loews Corp vs. Global Indemnity PLC | Loews Corp vs. Selective Insurance Group | Loews Corp vs. Kemper |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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