Correlation Between Old Dominion and Capital One
Can any of the company-specific risk be diversified away by investing in both Old Dominion 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 Old Dominion and Capital One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Dominion Freight and Capital One Financial, you can compare the effects of market volatilities on Old Dominion 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 Old Dominion with a short position of Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and Capital One.
Diversification Opportunities for Old Dominion and Capital One
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Old and Capital is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight 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 Old Dominion 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 Old Dominion Freight 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 Old Dominion i.e., Old Dominion and Capital One go up and down completely randomly.
Pair Corralation between Old Dominion and Capital One
Given the investment horizon of 90 days Old Dominion Freight is expected to generate 1.73 times more return on investment than Capital One. However, Old Dominion is 1.73 times more volatile than Capital One Financial. It trades about 0.01 of its potential returns per unit of risk. Capital One Financial is currently generating about 0.01 per unit of risk. If you would invest 15,124 in Old Dominion Freight on January 15, 2025 and sell it today you would earn a total of 387.00 from holding Old Dominion Freight or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Old Dominion Freight vs. Capital One Financial
Performance |
| Timeline |
| Old Dominion Freight |
| Capital One Financial |
Old Dominion and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Dominion and Capital One
The main advantage of trading using opposite Old Dominion and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion 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.| Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
| Capital One vs. Catalyst Pharmaceuticals | Capital One vs. Regeneron Pharmaceuticals | Capital One vs. Tarsus Pharmaceuticals | Capital One vs. BioNTech SE |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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