Correlation Between Capital One and Crdito Real

Can any of the company-specific risk be diversified away by investing in both Capital One and Crdito Real 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 Crdito Real 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 Crdito Real SAB, you can compare the effects of market volatilities on Capital One and Crdito Real 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 Crdito Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and Crdito Real.

Diversification Opportunities for Capital One and Crdito Real

0.0

Correlation Coefficient

Capital One  Crdito Real

Pay attention - limited upside

The 3 months correlation between Capital and Crdito is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Crdito Real SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crdito Real SAB 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 Crdito Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crdito Real SAB has no effect on the direction of Capital One i.e., Capital One and Crdito Real go up and down completely randomly.

Pair Corralation between Capital One and Crdito Real

If you would invest  176,016  in Capital One Financial on October 12, 2024 and sell it today you would earn a total of  197,072  from holding Capital One Financial or generate 111.96% return on investment over 90 days.

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

Capital One Financial  vs.  Crdito Real SAB

Capital One Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capital One Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Capital One showed solid returns over the last few months and may actually be approaching a breakup point.

Crdito Real SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crdito Real SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Crdito Real is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Capital One and Crdito Real

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

The idea behind Capital One Financial and Crdito Real SAB 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.