Correlation Between Capri Holdings and New Destiny
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and New Destiny 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 New Destiny into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and New Destiny Mining, you can compare the effects of market volatilities on Capri Holdings and New Destiny 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 New Destiny. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and New Destiny.
Diversification Opportunities for Capri Holdings and New Destiny
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capri and New is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and New Destiny Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Destiny Mining 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 New Destiny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Destiny Mining has no effect on the direction of Capri Holdings i.e., Capri Holdings and New Destiny go up and down completely randomly.
Pair Corralation between Capri Holdings and New Destiny
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the New Destiny. But the stock apears to be less risky and, when comparing its historical volatility, Capri Holdings is 2.05 times less risky than New Destiny. The stock trades about -0.03 of its potential returns per unit of risk. The New Destiny Mining is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 6.00 in New Destiny Mining on September 1, 2024 and sell it today you would lose (3.00) from holding New Destiny Mining or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capri Holdings vs. New Destiny Mining
Performance |
| Timeline |
| Capri Holdings |
| New Destiny Mining |
Capri Holdings and New Destiny Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and New Destiny
The main advantage of trading using opposite Capri Holdings and New Destiny positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, New Destiny 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 New Destiny will offset losses from the drop in New Destiny's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| New Destiny vs. Kiplin Metals | New Destiny vs. Pure Energy Minerals | New Destiny vs. Noram Lithium Corp | New Destiny vs. Minnova Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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