Correlation Between Capital One and Silvercrest Asset

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

Diversification Opportunities for Capital One and Silvercrest Asset

0.79

Correlation Coefficient

Capital One  Silvercrest Asset

Poor diversification

The 3 months correlation between Capital and Silvercrest is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Silvercrest Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercrest Asset 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 Silvercrest Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silvercrest Asset has no effect on the direction of Capital One i.e., Capital One and Silvercrest Asset go up and down completely randomly.

Pair Corralation between Capital One and Silvercrest Asset

Considering the 90-day investment horizon Capital One Financial is expected to generate 1.23 times more return on investment than Silvercrest Asset. However, Capital One is 1.23 times more volatile than Silvercrest Asset Management. It trades about 0.14 of its potential returns per unit of risk. Silvercrest Asset Management is currently generating about 0.1 per unit of risk. If you would invest  14,902  in Capital One Financial on October 8, 2024 and sell it today you would earn a total of  3,141  from holding Capital One Financial or generate 21.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Capital One Financial  vs.  Silvercrest Asset Management

Capital One Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capital One Financial are ranked lower than 10 (%) 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.

Silvercrest Asset

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Silvercrest Asset Management are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Silvercrest Asset may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Capital One and Silvercrest Asset

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

The idea behind Capital One Financial and Silvercrest Asset Management 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.