Correlation Between Capri Holdings and Microsoft
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Microsoft 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 Capri Holdings and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Microsoft, you can compare the effects of market volatilities on Capri Holdings and Microsoft 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 Capri Holdings with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Microsoft.
Diversification Opportunities for Capri Holdings and Microsoft
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capri and Microsoft is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Capri Holdings 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 Capri Holdings are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Capri Holdings i.e., Capri Holdings and Microsoft go up and down completely randomly.
Pair Corralation between Capri Holdings and Microsoft
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Microsoft. In addition to that, Capri Holdings is 2.54 times more volatile than Microsoft. It trades about -0.02 of its total potential returns per unit of risk. Microsoft is currently generating about 0.08 per unit of volatility. If you would invest 24,312 in Microsoft on August 30, 2024 and sell it today you would earn a total of 18,588 from holding Microsoft or generate 76.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Capri Holdings vs. Microsoft
Performance |
| Timeline |
| Capri Holdings |
| Microsoft |
Capri Holdings and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Microsoft
The main advantage of trading using opposite Capri Holdings and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| Microsoft vs. United Airlines Holdings | Microsoft vs. Innovative Industrial Properties | Microsoft vs. EVS Broadcast Equipment | Microsoft vs. GreenX Metals |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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