Correlation Between Upstart Holdings and Capital One
Can any of the company-specific risk be diversified away by investing in both Upstart Holdings 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 Upstart Holdings and Capital One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Upstart Holdings and Capital One Financial, you can compare the effects of market volatilities on Upstart Holdings 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 Upstart Holdings with a short position of Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Upstart Holdings and Capital One.
Diversification Opportunities for Upstart Holdings and Capital One
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Upstart and Capital is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Upstart 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 Upstart Holdings 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 Upstart 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 Upstart Holdings i.e., Upstart Holdings and Capital One go up and down completely randomly.
Pair Corralation between Upstart Holdings and Capital One
Given the investment horizon of 90 days Upstart Holdings is expected to generate 2.93 times more return on investment than Capital One. However, Upstart Holdings is 2.93 times more volatile than Capital One Financial. It trades about 0.23 of its potential returns per unit of risk. Capital One Financial is currently generating about 0.22 per unit of risk. If you would invest 5,042 in Upstart Holdings on August 30, 2024 and sell it today you would earn a total of 2,801 from holding Upstart Holdings or generate 55.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Upstart Holdings vs. Capital One Financial
Performance |
| Timeline |
| Upstart Holdings |
| Capital One Financial |
Upstart Holdings and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Upstart Holdings and Capital One
The main advantage of trading using opposite Upstart Holdings and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Upstart Holdings 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.| Upstart Holdings vs. SoFi Technologies | Upstart Holdings vs. Visa Class A | Upstart Holdings vs. Mastercard | Upstart Holdings vs. American Express |
| Capital One vs. Mastercard | Capital One vs. Visa Class A | Capital One vs. PayPal Holdings | Capital One vs. Ally 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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