Correlation Between Capri Holdings and L1 Long
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and L1 Long 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 L1 Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and L1 Long Short, you can compare the effects of market volatilities on Capri Holdings and L1 Long 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 L1 Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and L1 Long.
Diversification Opportunities for Capri Holdings and L1 Long
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capri and LSF is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and L1 Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L1 Long Short 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 L1 Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L1 Long Short has no effect on the direction of Capri Holdings i.e., Capri Holdings and L1 Long go up and down completely randomly.
Pair Corralation between Capri Holdings and L1 Long
Given the investment horizon of 90 days Capri Holdings is expected to generate 2.14 times more return on investment than L1 Long. However, Capri Holdings is 2.14 times more volatile than L1 Long Short. It trades about 0.13 of its potential returns per unit of risk. L1 Long Short is currently generating about -0.05 per unit of risk. If you would invest 2,139 in Capri Holdings on August 29, 2024 and sell it today you would earn a total of 213.00 from holding Capri Holdings or generate 9.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capri Holdings vs. L1 Long Short
Performance |
| Timeline |
| Capri Holdings |
| L1 Long Short |
Capri Holdings and L1 Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and L1 Long
The main advantage of trading using opposite Capri Holdings and L1 Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, L1 Long 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 L1 Long will offset losses from the drop in L1 Long's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| L1 Long vs. Champion Iron | L1 Long vs. Ridley | L1 Long vs. Peel Mining | L1 Long vs. Australian Dairy Farms |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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