Correlation Between Capri Holdings and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Legg Mason 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 Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Legg Mason Low, you can compare the effects of market volatilities on Capri Holdings and Legg Mason 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 Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Legg Mason.
Diversification Opportunities for Capri Holdings and Legg Mason
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Capri and Legg is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Legg Mason Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Low 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 Legg Mason. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legg Mason Low has no effect on the direction of Capri Holdings i.e., Capri Holdings and Legg Mason go up and down completely randomly.
Pair Corralation between Capri Holdings and Legg Mason
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Legg Mason. In addition to that, Capri Holdings is 5.29 times more volatile than Legg Mason Low. It trades about -0.02 of its total potential returns per unit of risk. Legg Mason Low is currently generating about 0.05 per unit of volatility. If you would invest 3,510 in Legg Mason Low on September 1, 2024 and sell it today you would earn a total of 614.00 from holding Legg Mason Low or generate 17.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capri Holdings vs. Legg Mason Low
Performance |
| Timeline |
| Capri Holdings |
| Legg Mason Low |
Capri Holdings and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Legg Mason
The main advantage of trading using opposite Capri Holdings and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Legg Mason 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 Legg Mason will offset losses from the drop in Legg Mason's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| Legg Mason vs. iShares Core SP | Legg Mason vs. iShares Core MSCI | Legg Mason vs. iShares Broad USD | Legg Mason vs. iShares Core SP |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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