Correlation Between Capri Holdings and Chewy
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Chewy 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 Chewy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Chewy Inc, you can compare the effects of market volatilities on Capri Holdings and Chewy 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 Chewy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Chewy.
Diversification Opportunities for Capri Holdings and Chewy
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capri and Chewy is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Chewy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chewy Inc 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 Chewy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chewy Inc has no effect on the direction of Capri Holdings i.e., Capri Holdings and Chewy go up and down completely randomly.
Pair Corralation between Capri Holdings and Chewy
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Chewy. In addition to that, Capri Holdings is 1.09 times more volatile than Chewy Inc. It trades about -0.03 of its total potential returns per unit of risk. Chewy Inc is currently generating about 0.01 per unit of volatility. If you would invest 4,331 in Chewy Inc on August 24, 2024 and sell it today you would lose (744.00) from holding Chewy Inc or give up 17.18% 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. Chewy Inc
Performance |
| Timeline |
| Capri Holdings |
| Chewy Inc |
Capri Holdings and Chewy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Chewy
The main advantage of trading using opposite Capri Holdings and Chewy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Chewy 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 Chewy will offset losses from the drop in Chewy'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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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