Correlation Between Capri Holdings and AGFA Gevaert
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and AGFA Gevaert 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 AGFA Gevaert into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and AGFA Gevaert NV, you can compare the effects of market volatilities on Capri Holdings and AGFA Gevaert 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 AGFA Gevaert. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and AGFA Gevaert.
Diversification Opportunities for Capri Holdings and AGFA Gevaert
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capri and AGFA is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and AGFA Gevaert NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGFA Gevaert NV 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 AGFA Gevaert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGFA Gevaert NV has no effect on the direction of Capri Holdings i.e., Capri Holdings and AGFA Gevaert go up and down completely randomly.
Pair Corralation between Capri Holdings and AGFA Gevaert
Given the investment horizon of 90 days Capri Holdings is expected to generate 0.6 times more return on investment than AGFA Gevaert. However, Capri Holdings is 1.67 times less risky than AGFA Gevaert. It trades about 0.26 of its potential returns per unit of risk. AGFA Gevaert NV is currently generating about -0.15 per unit of risk. If you would invest 1,974 in Capri Holdings on September 1, 2024 and sell it today you would earn a total of 367.00 from holding Capri Holdings or generate 18.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Capri Holdings vs. AGFA Gevaert NV
Performance |
| Timeline |
| Capri Holdings |
| AGFA Gevaert NV |
Capri Holdings and AGFA Gevaert Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and AGFA Gevaert
The main advantage of trading using opposite Capri Holdings and AGFA Gevaert positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, AGFA Gevaert 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 AGFA Gevaert will offset losses from the drop in AGFA Gevaert's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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