Correlation Between Capital One and CYIOS

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

Diversification Opportunities for Capital One and CYIOS

-0.74

Correlation Coefficient

Capital One  CYIOS

Pay attention - limited upside

The 3 months correlation between Capital and CYIOS is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and CYIOS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CYIOS 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 CYIOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CYIOS has no effect on the direction of Capital One i.e., Capital One and CYIOS go up and down completely randomly.

Pair Corralation between Capital One and CYIOS

Considering the 90-day investment horizon Capital One is expected to generate 4.73 times less return on investment than CYIOS. But when comparing it to its historical volatility, Capital One Financial is 6.1 times less risky than CYIOS. It trades about 0.07 of its potential returns per unit of risk. CYIOS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.02  in CYIOS on September 12, 2024 and sell it today you would lose (0.09) from holding CYIOS or give up 8.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Capital One Financial  vs.  CYIOS

Capital One Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capital One Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Capital One reported solid returns over the last few months and may actually be approaching a breakup point.

CYIOS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CYIOS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Capital One and CYIOS

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

The idea behind Capital One Financial and CYIOS 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.