Correlation Between Trade Desk and Capital One
Can any of the company-specific risk be diversified away by investing in both Trade Desk 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 Trade Desk and Capital One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Trade Desk and Capital One Financial, you can compare the effects of market volatilities on Trade Desk 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 Trade Desk with a short position of Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trade Desk and Capital One.
Diversification Opportunities for Trade Desk and Capital One
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Trade and Capital is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding The Trade Desk 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 Trade Desk 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 The Trade Desk 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 Trade Desk i.e., Trade Desk and Capital One go up and down completely randomly.
Pair Corralation between Trade Desk and Capital One
Assuming the 90 days trading horizon The Trade Desk is expected to generate 1.56 times more return on investment than Capital One. However, Trade Desk is 1.56 times more volatile than Capital One Financial. It trades about 0.12 of its potential returns per unit of risk. Capital One Financial is currently generating about 0.17 per unit of risk. If you would invest 350.00 in The Trade Desk on August 27, 2024 and sell it today you would earn a total of 397.00 from holding The Trade Desk or generate 113.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.2% |
| Values | Daily Returns |
The Trade Desk vs. Capital One Financial
Performance |
| Timeline |
| Trade Desk |
| Capital One Financial |
Trade Desk and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trade Desk and Capital One
The main advantage of trading using opposite Trade Desk and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trade Desk 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.| Trade Desk vs. Warner Music Group | Trade Desk vs. Align Technology | Trade Desk vs. Metalrgica Riosulense SA | Trade Desk vs. Agilent Technologies |
| Capital One vs. G2D Investments | Capital One vs. New Oriental Education | Capital One vs. Electronic Arts | Capital One vs. Marfrig Global Foods |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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