Correlation Between Capital One and Mdica Sur

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

Diversification Opportunities for Capital One and Mdica Sur

-0.41

Correlation Coefficient

Capital One  Mdica Sur

Very good diversification

The 3 months correlation between Capital and Mdica is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Mdica Sur SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mdica Sur 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 Mdica Sur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mdica Sur SAB has no effect on the direction of Capital One i.e., Capital One and Mdica Sur go up and down completely randomly.

Pair Corralation between Capital One and Mdica Sur

Assuming the 90 days trading horizon Capital One Financial is expected to under-perform the Mdica Sur. In addition to that, Capital One is 2.01 times more volatile than Mdica Sur SAB. It trades about -0.04 of its total potential returns per unit of risk. Mdica Sur SAB is currently generating about 0.04 per unit of volatility. If you would invest  3,423  in Mdica Sur SAB on December 25, 2024 and sell it today you would earn a total of  77.00  from holding Mdica Sur SAB or generate 2.25% return on investment over 90 days.

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

Capital One Financial  vs.  Mdica Sur 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.

Mdica Sur SAB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mdica Sur SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Mdica Sur 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 Mdica Sur

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

The idea behind Capital One Financial and Mdica Sur 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.