Correlation Between National Bank and Capital One
Can any of the company-specific risk be diversified away by investing in both National Bank 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 National Bank and Capital One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank Holdings and Capital One Financial, you can compare the effects of market volatilities on National Bank 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 National Bank with a short position of Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Capital One.
Diversification Opportunities for National Bank and Capital One
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between National and Capital is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding National Bank 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 National Bank 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 National Bank 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 National Bank i.e., National Bank and Capital One go up and down completely randomly.
Pair Corralation between National Bank and Capital One
Assuming the 90 days horizon National Bank Holdings is expected to under-perform the Capital One. But the stock apears to be less risky and, when comparing its historical volatility, National Bank Holdings is 1.21 times less risky than Capital One. The stock trades about -0.08 of its potential returns per unit of risk. The Capital One Financial is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 17,141 in Capital One Financial on September 12, 2024 and sell it today you would earn a total of 559.00 from holding Capital One Financial or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. Capital One Financial
Performance |
| Timeline |
| National Bank Holdings |
| Capital One Financial |
National Bank and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Capital One
The main advantage of trading using opposite National Bank and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank 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.| National Bank vs. Fifth Third Bancorp | National Bank vs. Regions Financial | National Bank vs. Superior Plus Corp | National Bank vs. SIVERS SEMICONDUCTORS AB |
| Capital One vs. Mastercard | Capital One vs. American Express | Capital One vs. ORIX Corporation | Capital One vs. Superior Plus Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |