Correlation Between Associates First and Capital One

Can any of the company-specific risk be diversified away by investing in both Associates First 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 Associates First and Capital One into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Associates First Capital and Capital One Financial, you can compare the effects of market volatilities on Associates First 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 Associates First with a short position of Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associates First and Capital One.

Diversification Opportunities for Associates First and Capital One

0.0

Correlation Coefficient

Associates First  Capital One

Pay attention - limited upside

The 3 months correlation between Associates and Capital is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Associates First Capital 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 Associates First 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 Associates First Capital 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 Associates First i.e., Associates First and Capital One go up and down completely randomly.

Pair Corralation between Associates First and Capital One

Given the investment horizon of 90 days Associates First Capital is expected to generate 36.53 times more return on investment than Capital One. However, Associates First is 36.53 times more volatile than Capital One Financial. It trades about 0.04 of its potential returns per unit of risk. Capital One Financial is currently generating about 0.03 per unit of risk. If you would invest  0.01  in Associates First Capital on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Associates First Capital or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Associates First Capital  vs.  Capital One Financial

Associates First Capital

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Associates First Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Associates First is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Capital One Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital One Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Associates First and Capital One

The main advantage of trading using opposite Associates First and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associates First 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.

The idea behind Associates First Capital and Capital One Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.