Correlation Between Capital One and Nemak S

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

Diversification Opportunities for Capital One and Nemak S

-0.04

Correlation Coefficient

Capital One  Nemak S

Good diversification

The 3 months correlation between Capital and Nemak is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Nemak S A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nemak S A 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 Nemak S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nemak S A has no effect on the direction of Capital One i.e., Capital One and Nemak S go up and down completely randomly.

Pair Corralation between Capital One and Nemak S

Assuming the 90 days trading horizon Capital One Financial is expected to under-perform the Nemak S. But the stock apears to be less risky and, when comparing its historical volatility, Capital One Financial is 3.45 times less risky than Nemak S. The stock trades about -0.03 of its potential returns per unit of risk. The Nemak S A is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest  175.00  in Nemak S A on September 25, 2024 and sell it today you would earn a total of  104.00  from holding Nemak S A or generate 59.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Capital One Financial  vs.  Nemak S A

Capital One Financial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capital One Financial are ranked lower than 13 (%) 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.

Nemak S A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nemak S A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Nemak S sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capital One and Nemak S

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

The idea behind Capital One Financial and Nemak S A 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.