Correlation Between Capital One and FibraHotel

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

Diversification Opportunities for Capital One and FibraHotel

-0.65

Correlation Coefficient

Capital One  FibraHotel

Excellent diversification

The 3 months correlation between Capital and FibraHotel is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and FibraHotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibraHotel 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 FibraHotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibraHotel has no effect on the direction of Capital One i.e., Capital One and FibraHotel go up and down completely randomly.

Pair Corralation between Capital One and FibraHotel

Assuming the 90 days trading horizon Capital One Financial is expected to generate 0.54 times more return on investment than FibraHotel. However, Capital One Financial is 1.86 times less risky than FibraHotel. It trades about 0.14 of its potential returns per unit of risk. FibraHotel is currently generating about -0.07 per unit of risk. If you would invest  357,292  in Capital One Financial on May 7, 2025 and sell it today you would earn a total of  40,603  from holding Capital One Financial or generate 11.36% return on investment over 90 days.

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

Capital One Financial  vs.  FibraHotel

Capital One Financial

Risk-Adjusted Performance

Fair

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. In spite of fairly weak technical and fundamental indicators, Capital One may actually be approaching a critical reversion point that can send shares even higher in September 2025.

FibraHotel

Risk-Adjusted Performance

Weakest

Over the last 90 days FibraHotel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Capital One and FibraHotel

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

The idea behind Capital One Financial and FibraHotel 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.