Correlation Between UBS Group and Capital One
Can any of the company-specific risk be diversified away by investing in both UBS Group 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 UBS Group and Capital One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS Group AG and Capital One Financial, you can compare the effects of market volatilities on UBS Group 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 UBS Group with a short position of Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Group and Capital One.
Diversification Opportunities for UBS Group and Capital One
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UBS and Capital is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding UBS Group AG 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 UBS Group 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 UBS Group AG 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 UBS Group i.e., UBS Group and Capital One go up and down completely randomly.
Pair Corralation between UBS Group and Capital One
Assuming the 90 days trading horizon UBS Group AG is expected to generate 0.22 times more return on investment than Capital One. However, UBS Group AG is 4.63 times less risky than Capital One. It trades about 0.32 of its potential returns per unit of risk. Capital One Financial is currently generating about 0.06 per unit of risk. If you would invest 64,400 in UBS Group AG on September 12, 2024 and sell it today you would earn a total of 1,600 from holding UBS Group AG or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS Group AG vs. Capital One Financial
Performance |
| Timeline |
| UBS Group AG |
| Capital One Financial |
UBS Group and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS Group and Capital One
The main advantage of trading using opposite UBS Group and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS Group 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.| UBS Group vs. Costco Wholesale | UBS Group vs. United Airlines Holdings | UBS Group vs. Applied Materials | UBS Group vs. Grupo Carso SAB |
| Capital One vs. Financiera Independencia SAB | Capital One vs. The Select Sector | Capital One vs. Promotora y Operadora | Capital One vs. iShares Global Timber |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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