Correlation Between Capri Holdings and Meridian Small
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Meridian Small 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 Meridian Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Meridian Small Cap, you can compare the effects of market volatilities on Capri Holdings and Meridian Small 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 Meridian Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Meridian Small.
Diversification Opportunities for Capri Holdings and Meridian Small
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Capri and Meridian is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Meridian Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Small Cap 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 Meridian Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Small Cap has no effect on the direction of Capri Holdings i.e., Capri Holdings and Meridian Small go up and down completely randomly.
Pair Corralation between Capri Holdings and Meridian Small
Given the investment horizon of 90 days Capri Holdings is expected to generate 2.94 times more return on investment than Meridian Small. However, Capri Holdings is 2.94 times more volatile than Meridian Small Cap. It trades about 0.26 of its potential returns per unit of risk. Meridian Small Cap is currently generating about 0.35 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 | 95.45% |
| Values | Daily Returns |
Capri Holdings vs. Meridian Small Cap
Performance |
| Timeline |
| Capri Holdings |
| Meridian Small Cap |
Capri Holdings and Meridian Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Meridian Small
The main advantage of trading using opposite Capri Holdings and Meridian Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Meridian Small 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 Meridian Small will offset losses from the drop in Meridian Small's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| Meridian Small vs. Meridian Equity Income | Meridian Small vs. Meridian Equity Income | Meridian Small vs. Meridian Growth Fund | Meridian Small vs. Meridian Equity Income |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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