Correlation Between Chiba Bank and Capital One

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

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

Diversification Opportunities for Chiba Bank and Capital One

0.21

Correlation Coefficient

Chiba Bank  Capital One

Modest diversification

The 3 months correlation between Chiba and Capital is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Chiba Bank Ltd 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 Chiba Bank 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 Chiba Bank Ltd 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 Chiba Bank i.e., Chiba Bank and Capital One go up and down completely randomly.

Pair Corralation between Chiba Bank and Capital One

Assuming the 90 days horizon Chiba Bank Ltd is expected to generate 0.99 times more return on investment than Capital One. However, Chiba Bank Ltd is 1.01 times less risky than Capital One. It trades about 0.03 of its potential returns per unit of risk. Capital One Financial is currently generating about -0.11 per unit of risk. If you would invest  3,704  in Chiba Bank Ltd on September 14, 2024 and sell it today you would earn a total of  64.00  from holding Chiba Bank Ltd or generate 1.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Chiba Bank Ltd  vs.  Capital One Financial

Chiba Bank

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chiba Bank Ltd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Chiba Bank 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 uncertain performance, the Preferred Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Chiba Bank and Capital One

The main advantage of trading using opposite Chiba Bank and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chiba Bank 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 Chiba Bank Ltd 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.