Correlation Between Capital One and Grupo KUO

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

Diversification Opportunities for Capital One and Grupo KUO

0.0

Correlation Coefficient

Capital One  Grupo KUO

Pay attention - limited upside

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

Pair Corralation between Capital One and Grupo KUO

Assuming the 90 days trading horizon Capital One Financial is expected to under-perform the Grupo KUO. In addition to that, Capital One is 1.6 times more volatile than Grupo KUO SAB. It trades about -0.02 of its total potential returns per unit of risk. Grupo KUO SAB is currently generating about -0.01 per unit of volatility. If you would invest  4,055  in Grupo KUO SAB on December 30, 2024 and sell it today you would lose (55.00) from holding Grupo KUO SAB or give up 1.36% of portfolio value over 90 days.

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

Capital One Financial  vs.  Grupo KUO SAB

Capital One Financial

Risk-Adjusted Performance

Very Weak

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

Grupo KUO SAB

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Capital One and Grupo KUO

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

The idea behind Capital One Financial and Grupo KUO 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.