Correlation Between Moelis and Capital One

Can any of the company-specific risk be diversified away by investing in both Moelis and Capital One 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 Moelis and Capital One into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Moelis Co and Capital One Financial, you can compare the effects of market volatilities on Moelis and Capital One 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 Moelis with a short position of Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moelis and Capital One.

Diversification Opportunities for Moelis and Capital One

0.92

Correlation Coefficient

Moelis  Capital One

Almost no diversification

The 3 months correlation between Moelis and Capital is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Moelis Co and Capital One Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital One Financial and Moelis 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 Moelis Co are associated (or correlated) with Capital One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital One Financial has no effect on the direction of Moelis i.e., Moelis and Capital One go up and down completely randomly.

Pair Corralation between Moelis and Capital One

Allowing for the 90-day total investment horizon Moelis Co is expected to generate 1.36 times more return on investment than Capital One. However, Moelis is 1.36 times more volatile than Capital One Financial. It trades about 0.18 of its potential returns per unit of risk. Capital One Financial is currently generating about 0.1 per unit of risk. If you would invest  5,345  in Moelis Co on May 5, 2025 and sell it today you would earn a total of  1,513  from holding Moelis Co or generate 28.31% return on investment over 90 days.

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

Moelis Co  vs.  Capital One Financial

Moelis

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Moelis Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Moelis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Capital One Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capital One Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Capital One may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Moelis and Capital One

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

The idea behind Moelis Co and Capital One Financial 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.