Correlation Between Capri Holdings and NewMed Energy
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and NewMed Energy 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 NewMed Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and NewMed Energy , you can compare the effects of market volatilities on Capri Holdings and NewMed Energy 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 NewMed Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and NewMed Energy.
Diversification Opportunities for Capri Holdings and NewMed Energy
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Capri and NewMed is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and NewMed Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewMed Energy 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 NewMed Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewMed Energy has no effect on the direction of Capri Holdings i.e., Capri Holdings and NewMed Energy go up and down completely randomly.
Pair Corralation between Capri Holdings and NewMed Energy
Given the investment horizon of 90 days Capri Holdings is expected to generate 2.26 times more return on investment than NewMed Energy. However, Capri Holdings is 2.26 times more volatile than NewMed Energy . It trades about 0.26 of its potential returns per unit of risk. NewMed Energy is currently generating about 0.04 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 | Significant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Capri Holdings vs. NewMed Energy
Performance |
| Timeline |
| Capri Holdings |
| NewMed Energy |
Capri Holdings and NewMed Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and NewMed Energy
The main advantage of trading using opposite Capri Holdings and NewMed Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, NewMed Energy 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 NewMed Energy will offset losses from the drop in NewMed Energy's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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