Correlation Between Capri Holdings and Basic Energy
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Basic 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 Basic 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 Basic Energy Corp, you can compare the effects of market volatilities on Capri Holdings and Basic 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 Basic Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Basic Energy.
Diversification Opportunities for Capri Holdings and Basic Energy
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capri and Basic is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Basic Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Energy Corp 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 Basic Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Energy Corp has no effect on the direction of Capri Holdings i.e., Capri Holdings and Basic Energy go up and down completely randomly.
Pair Corralation between Capri Holdings and Basic Energy
Given the investment horizon of 90 days Capri Holdings is expected to generate 2.16 times more return on investment than Basic Energy. However, Capri Holdings is 2.16 times more volatile than Basic Energy Corp. It trades about -0.03 of its potential returns per unit of risk. Basic Energy Corp is currently generating about -0.06 per unit of risk. If you would invest 3,441 in Capri Holdings on September 1, 2024 and sell it today you would lose (1,100) from holding Capri Holdings or give up 31.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Capri Holdings vs. Basic Energy Corp
Performance |
| Timeline |
| Capri Holdings |
| Basic Energy Corp |
Capri Holdings and Basic Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Basic Energy
The main advantage of trading using opposite Capri Holdings and Basic Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Basic 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 Basic Energy will offset losses from the drop in Basic Energy's long position.| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |