Correlation Between Capital One and Proficient Auto

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

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

Diversification Opportunities for Capital One and Proficient Auto

0.44

Correlation Coefficient

Capital One  Proficient Auto

Very weak diversification

The 3 months correlation between Capital and Proficient is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Proficient Auto Logistics, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proficient Auto Logi and Capital One 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 Capital One Financial are associated (or correlated) with Proficient Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proficient Auto Logi has no effect on the direction of Capital One i.e., Capital One and Proficient Auto go up and down completely randomly.

Pair Corralation between Capital One and Proficient Auto

Assuming the 90 days trading horizon Capital One is expected to generate 8.45 times less return on investment than Proficient Auto. But when comparing it to its historical volatility, Capital One Financial is 5.02 times less risky than Proficient Auto. It trades about 0.06 of its potential returns per unit of risk. Proficient Auto Logistics, is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  768.00  in Proficient Auto Logistics, on December 21, 2024 and sell it today you would earn a total of  221.00  from holding Proficient Auto Logistics, or generate 28.78% return on investment over 90 days.

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

Capital One Financial  vs.  Proficient Auto Logistics,

Capital One Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capital One Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Capital One is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Proficient Auto Logi

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Proficient Auto Logistics, are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Proficient Auto disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capital One and Proficient Auto

The main advantage of trading using opposite Capital One and Proficient Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One position performs unexpectedly, Proficient Auto 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 Proficient Auto will offset losses from the drop in Proficient Auto's long position.

The idea behind Capital One Financial and Proficient Auto Logistics, 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.