Correlation Between Capri Holdings and Gaming
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Gaming 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 Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Gaming and Leisure, you can compare the effects of market volatilities on Capri Holdings and Gaming 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 Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Gaming.
Diversification Opportunities for Capri Holdings and Gaming
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capri and Gaming is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Gaming and Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming and Leisure 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 Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming and Leisure has no effect on the direction of Capri Holdings i.e., Capri Holdings and Gaming go up and down completely randomly.
Pair Corralation between Capri Holdings and Gaming
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Gaming. In addition to that, Capri Holdings is 4.43 times more volatile than Gaming and Leisure. It trades about -0.03 of its total potential returns per unit of risk. Gaming and Leisure is currently generating about 0.14 per unit of volatility. If you would invest 3,982 in Gaming and Leisure on September 1, 2024 and sell it today you would earn a total of 897.00 from holding Gaming and Leisure or generate 22.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.18% |
| Values | Daily Returns |
Capri Holdings vs. Gaming and Leisure
Performance |
| Timeline |
| Capri Holdings |
| Gaming and Leisure |
Capri Holdings and Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Gaming
The main advantage of trading using opposite Capri Holdings and Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Gaming 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 Gaming will offset losses from the drop in Gaming's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| Gaming vs. YATRA ONLINE DL 0001 | Gaming vs. Lamar Advertising | Gaming vs. Columbia Sportswear | Gaming vs. Transportadora de Gas |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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