Correlation Between Capri Holdings and Jeronimo Martins
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Jeronimo Martins 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 Jeronimo Martins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Jeronimo Martins SGPS, you can compare the effects of market volatilities on Capri Holdings and Jeronimo Martins 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 Jeronimo Martins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Jeronimo Martins.
Diversification Opportunities for Capri Holdings and Jeronimo Martins
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Capri and Jeronimo is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Jeronimo Martins SGPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeronimo Martins SGPS 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 Jeronimo Martins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeronimo Martins SGPS has no effect on the direction of Capri Holdings i.e., Capri Holdings and Jeronimo Martins go up and down completely randomly.
Pair Corralation between Capri Holdings and Jeronimo Martins
Given the investment horizon of 90 days Capri Holdings is expected to generate 2.38 times more return on investment than Jeronimo Martins. However, Capri Holdings is 2.38 times more volatile than Jeronimo Martins SGPS. It trades about 0.26 of its potential returns per unit of risk. Jeronimo Martins SGPS is currently generating about 0.1 per unit of risk. If you would invest 1,974 in Capri Holdings on September 1, 2024 and sell it today you would earn a total of 367.00 from holding Capri Holdings or generate 18.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Capri Holdings vs. Jeronimo Martins SGPS
Performance |
| Timeline |
| Capri Holdings |
| Jeronimo Martins SGPS |
Capri Holdings and Jeronimo Martins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Jeronimo Martins
The main advantage of trading using opposite Capri Holdings and Jeronimo Martins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Jeronimo Martins 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 Jeronimo Martins will offset losses from the drop in Jeronimo Martins' long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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