Correlation Between Capital One and Unifin Financiera

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

Diversification Opportunities for Capital One and Unifin Financiera

0.0

Correlation Coefficient

Capital One  Unifin Financiera

Pay attention - limited upside

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

Pair Corralation between Capital One and Unifin Financiera

Assuming the 90 days trading horizon Capital One is expected to generate 10.26 times less return on investment than Unifin Financiera. But when comparing it to its historical volatility, Capital One Financial is 17.49 times less risky than Unifin Financiera. It trades about 0.08 of its potential returns per unit of risk. Unifin Financiera S is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  120.00  in Unifin Financiera S on October 12, 2024 and sell it today you would earn a total of  1,080  from holding Unifin Financiera S or generate 900.0% 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.  Unifin Financiera S

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.

Unifin Financiera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unifin Financiera S has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Unifin Financiera is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Capital One and Unifin Financiera

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

The idea behind Capital One Financial and Unifin Financiera S 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.