Correlation Between Capri Holdings and World Oil
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and World Oil 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 World Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and World Oil Group, you can compare the effects of market volatilities on Capri Holdings and World Oil 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 World Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and World Oil.
Diversification Opportunities for Capri Holdings and World Oil
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capri and World is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and World Oil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Oil Group 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 World Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Oil Group has no effect on the direction of Capri Holdings i.e., Capri Holdings and World Oil go up and down completely randomly.
Pair Corralation between Capri Holdings and World Oil
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the World Oil. But the stock apears to be less risky and, when comparing its historical volatility, Capri Holdings is 1.18 times less risky than World Oil. The stock trades about -0.12 of its potential returns per unit of risk. The World Oil Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2.75 in World Oil Group on August 29, 2024 and sell it today you would lose (0.76) from holding World Oil Group or give up 27.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capri Holdings vs. World Oil Group
Performance |
| Timeline |
| Capri Holdings |
| World Oil Group |
Capri Holdings and World Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and World Oil
The main advantage of trading using opposite Capri Holdings and World Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, World Oil 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 World Oil will offset losses from the drop in World Oil's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| World Oil vs. Honeywell International | World Oil vs. 3M Company | World Oil vs. Mitsubishi Corp | World Oil vs. Hitachi |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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