Correlation Between Capri Holdings and Ceres Power
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Ceres Power 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 Ceres Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Ceres Power Holdings, you can compare the effects of market volatilities on Capri Holdings and Ceres Power 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 Ceres Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Ceres Power.
Diversification Opportunities for Capri Holdings and Ceres Power
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capri and Ceres is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Ceres Power Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceres Power Holdings 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 Ceres Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceres Power Holdings has no effect on the direction of Capri Holdings i.e., Capri Holdings and Ceres Power go up and down completely randomly.
Pair Corralation between Capri Holdings and Ceres Power
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Ceres Power. In addition to that, Capri Holdings is 1.19 times more volatile than Ceres Power Holdings. It trades about -0.03 of its total potential returns per unit of risk. Ceres Power Holdings is currently generating about -0.03 per unit of volatility. If you would invest 21,780 in Ceres Power Holdings on September 1, 2024 and sell it today you would lose (5,170) from holding Ceres Power Holdings or give up 23.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.92% |
| Values | Daily Returns |
Capri Holdings vs. Ceres Power Holdings
Performance |
| Timeline |
| Capri Holdings |
| Ceres Power Holdings |
Capri Holdings and Ceres Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Ceres Power
The main advantage of trading using opposite Capri Holdings and Ceres Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Ceres Power 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 Ceres Power will offset losses from the drop in Ceres Power's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| Ceres Power vs. Datagroup SE | Ceres Power vs. Eastman Chemical Co | Ceres Power vs. Ion Beam Applications | Ceres Power vs. Automatic Data Processing |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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