Correlation Between Capri Holdings and Hermes International
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Hermes International 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 Hermes International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Hermes International SCA, you can compare the effects of market volatilities on Capri Holdings and Hermes International 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 Hermes International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Hermes International.
Diversification Opportunities for Capri Holdings and Hermes International
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capri and Hermes is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Hermes International SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hermes International SCA 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 Hermes International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hermes International SCA has no effect on the direction of Capri Holdings i.e., Capri Holdings and Hermes International go up and down completely randomly.
Pair Corralation between Capri Holdings and Hermes International
Given the investment horizon of 90 days Capri Holdings is expected to generate 1.02 times less return on investment than Hermes International. In addition to that, Capri Holdings is 1.58 times more volatile than Hermes International SCA. It trades about 0.3 of its total potential returns per unit of risk. Hermes International SCA is currently generating about 0.48 per unit of volatility. If you would invest 233,250 in Hermes International SCA on November 3, 2024 and sell it today you would earn a total of 49,850 from holding Hermes International SCA or generate 21.37% 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. Hermes International SCA
Performance |
| Timeline |
| Capri Holdings |
| Hermes International SCA |
Capri Holdings and Hermes International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Hermes International
The main advantage of trading using opposite Capri Holdings and Hermes International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Hermes International 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 Hermes International will offset losses from the drop in Hermes International's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| Hermes International vs. Christian Dior SE | Hermes International vs. Burberry Group Plc | Hermes International vs. Compagnie Financiere Richemont | Hermes International vs. Hermes International SA |
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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