Correlation Between Capital One and ORIX

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

Diversification Opportunities for Capital One and ORIX

0.86

Correlation Coefficient

Capital One  ORIX

Very poor diversification

The 3 months correlation between Capital and ORIX is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and ORIX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX 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 ORIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX has no effect on the direction of Capital One i.e., Capital One and ORIX go up and down completely randomly.

Pair Corralation between Capital One and ORIX

Assuming the 90 days horizon Capital One Financial is expected to generate 1.87 times more return on investment than ORIX. However, Capital One is 1.87 times more volatile than ORIX Corporation. It trades about 0.18 of its potential returns per unit of risk. ORIX Corporation is currently generating about 0.13 per unit of risk. If you would invest  14,553  in Capital One Financial on April 22, 2025 and sell it today you would earn a total of  4,247  from holding Capital One Financial or generate 29.18% return on investment over 90 days.

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

Capital One Financial  vs.  ORIX Corp.

Capital One Financial

Risk-Adjusted Performance

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

ORIX

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ORIX Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ORIX may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Capital One and ORIX

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

The idea behind Capital One Financial and ORIX Corporation 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.