Correlation Between Burberry Group and Capri Holdings
Can any of the company-specific risk be diversified away by investing in both Burberry Group and Capri Holdings 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 Burberry Group and Capri Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burberry Group Plc and Capri Holdings, you can compare the effects of market volatilities on Burberry Group and Capri Holdings 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 Burberry Group with a short position of Capri Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burberry Group and Capri Holdings.
Diversification Opportunities for Burberry Group and Capri Holdings
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Burberry and Capri is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Burberry Group Plc and Capri Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri Holdings and Burberry Group 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 Burberry Group Plc are associated (or correlated) with Capri Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capri Holdings has no effect on the direction of Burberry Group i.e., Burberry Group and Capri Holdings go up and down completely randomly.
Pair Corralation between Burberry Group and Capri Holdings
Assuming the 90 days horizon Burberry Group Plc is expected to under-perform the Capri Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Burberry Group Plc is 2.57 times less risky than Capri Holdings. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Capri Holdings is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,135 in Capri Holdings on October 22, 2024 and sell it today you would earn a total of 247.00 from holding Capri Holdings or generate 11.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burberry Group Plc vs. Capri Holdings
Performance |
| Timeline |
| Burberry Group Plc |
| Capri Holdings |
Burberry Group and Capri Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burberry Group and Capri Holdings
The main advantage of trading using opposite Burberry Group and Capri Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burberry Group position performs unexpectedly, Capri Holdings 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 Capri Holdings will offset losses from the drop in Capri Holdings' long position.| Burberry Group vs. Compagnie Financiere Richemont | Burberry Group vs. Hermes International SA | Burberry Group vs. Prada Spa PK | Burberry Group vs. Swatch Group AG |
| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
Check out your portfolio center.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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