Correlation Between Capri Holdings and Avanti Energy
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Avanti Energy 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 Avanti Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Avanti Energy, you can compare the effects of market volatilities on Capri Holdings and Avanti Energy 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 Avanti Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Avanti Energy.
Diversification Opportunities for Capri Holdings and Avanti Energy
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capri and Avanti is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Avanti Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanti Energy 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 Avanti Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanti Energy has no effect on the direction of Capri Holdings i.e., Capri Holdings and Avanti Energy go up and down completely randomly.
Pair Corralation between Capri Holdings and Avanti Energy
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Avanti Energy. But the stock apears to be less risky and, when comparing its historical volatility, Capri Holdings is 1.08 times less risky than Avanti Energy. The stock trades about -0.09 of its potential returns per unit of risk. The Avanti Energy is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 8.50 in Avanti Energy on January 11, 2025 and sell it today you would lose (1.26) from holding Avanti Energy or give up 14.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capri Holdings vs. Avanti Energy
Performance |
| Timeline |
| Capri Holdings |
| Avanti Energy |
Capri Holdings and Avanti Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Avanti Energy
The main advantage of trading using opposite Capri Holdings and Avanti Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Avanti Energy 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 Avanti Energy will offset losses from the drop in Avanti Energy's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| Avanti Energy vs. Desert Mountain Energy | Avanti Energy vs. Avanti Energy | Avanti Energy vs. Royal Helium | Avanti Energy vs. Total Helium |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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