Correlation Between Capital One and Inception Growth

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

Diversification Opportunities for Capital One and Inception Growth

0.75

Correlation Coefficient

Capital One  Inception Growth

Poor diversification

The 3 months correlation between Capital and Inception is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Inception Growth Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inception Growth Acq 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 Inception Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inception Growth Acq has no effect on the direction of Capital One i.e., Capital One and Inception Growth go up and down completely randomly.

Pair Corralation between Capital One and Inception Growth

Considering the 90-day investment horizon Capital One is expected to generate 2.93 times less return on investment than Inception Growth. In addition to that, Capital One is 1.32 times more volatile than Inception Growth Acquisition. It trades about 0.04 of its total potential returns per unit of risk. Inception Growth Acquisition is currently generating about 0.16 per unit of volatility. If you would invest  1,142  in Inception Growth Acquisition on September 17, 2024 and sell it today you would earn a total of  33.00  from holding Inception Growth Acquisition or generate 2.89% return on investment over 90 days.

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

Capital One Financial  vs.  Inception Growth Acquisition

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. Despite nearly abnormal basic indicators, Capital One reported solid returns over the last few months and may actually be approaching a breakup point.

Inception Growth Acq

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inception Growth Acquisition are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Inception Growth is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Capital One and Inception Growth

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

The idea behind Capital One Financial and Inception Growth Acquisition 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.