Correlation Between Capri Holdings and Compagnie Financiere
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Compagnie Financiere 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 Compagnie Financiere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Compagnie Financiere Richemont, you can compare the effects of market volatilities on Capri Holdings and Compagnie Financiere 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 Compagnie Financiere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Compagnie Financiere.
Diversification Opportunities for Capri Holdings and Compagnie Financiere
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capri and Compagnie is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Compagnie Financiere Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financiere 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 Compagnie Financiere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financiere has no effect on the direction of Capri Holdings i.e., Capri Holdings and Compagnie Financiere go up and down completely randomly.
Pair Corralation between Capri Holdings and Compagnie Financiere
Given the investment horizon of 90 days Capri Holdings is expected to generate 1.33 times less return on investment than Compagnie Financiere. But when comparing it to its historical volatility, Capri Holdings is 1.24 times less risky than Compagnie Financiere. It trades about 0.3 of its potential returns per unit of risk. Compagnie Financiere Richemont is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,514 in Compagnie Financiere Richemont on November 3, 2024 and sell it today you would earn a total of 417.00 from holding Compagnie Financiere Richemont or generate 27.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capri Holdings vs. Compagnie Financiere Richemont
Performance |
| Timeline |
| Capri Holdings |
| Compagnie Financiere |
Capri Holdings and Compagnie Financiere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Compagnie Financiere
The main advantage of trading using opposite Capri Holdings and Compagnie Financiere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Compagnie Financiere 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 Compagnie Financiere will offset losses from the drop in Compagnie Financiere's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| Compagnie Financiere vs. Burberry Group Plc | Compagnie Financiere vs. Hermes International SA | Compagnie Financiere vs. Prada Spa PK | Compagnie Financiere vs. Swatch Group AG |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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