Correlation Between Capri Holdings and Gear Energy
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Gear 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 Gear 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 Gear Energy, you can compare the effects of market volatilities on Capri Holdings and Gear 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 Gear Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Gear Energy.
Diversification Opportunities for Capri Holdings and Gear Energy
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capri and Gear is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Gear Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gear 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 Gear Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gear Energy has no effect on the direction of Capri Holdings i.e., Capri Holdings and Gear Energy go up and down completely randomly.
Pair Corralation between Capri Holdings and Gear Energy
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Gear Energy. In addition to that, Capri Holdings is 1.49 times more volatile than Gear Energy. It trades about -0.26 of its total potential returns per unit of risk. Gear Energy is currently generating about -0.24 per unit of volatility. If you would invest 35.00 in Gear Energy on November 27, 2024 and sell it today you would lose (2.00) from holding Gear Energy or give up 5.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 55.0% |
| Values | Daily Returns |
Capri Holdings vs. Gear Energy
Performance |
| Timeline |
| Capri Holdings |
| Gear Energy |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Capri Holdings and Gear Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Gear Energy
The main advantage of trading using opposite Capri Holdings and Gear Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Gear 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 Gear Energy will offset losses from the drop in Gear Energy's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. MEG Energy Corp | Gear Energy vs. Cardinal Energy | Gear Energy vs. Whitecap Resources |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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