Correlation Between Capri Holdings and NexGel Warrant
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and NexGel Warrant 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 NexGel Warrant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and NexGel Warrant, you can compare the effects of market volatilities on Capri Holdings and NexGel Warrant 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 NexGel Warrant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and NexGel Warrant.
Diversification Opportunities for Capri Holdings and NexGel Warrant
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capri and NexGel is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and NexGel Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGel Warrant 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 NexGel Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGel Warrant has no effect on the direction of Capri Holdings i.e., Capri Holdings and NexGel Warrant go up and down completely randomly.
Pair Corralation between Capri Holdings and NexGel Warrant
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the NexGel Warrant. But the stock apears to be less risky and, when comparing its historical volatility, Capri Holdings is 19.52 times less risky than NexGel Warrant. The stock trades about -0.03 of its potential returns per unit of risk. The NexGel Warrant is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 26.00 in NexGel Warrant on August 29, 2024 and sell it today you would earn a total of 20.00 from holding NexGel Warrant or generate 76.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 71.37% |
| Values | Daily Returns |
Capri Holdings vs. NexGel Warrant
Performance |
| Timeline |
| Capri Holdings |
| NexGel Warrant |
Capri Holdings and NexGel Warrant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and NexGel Warrant
The main advantage of trading using opposite Capri Holdings and NexGel Warrant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, NexGel Warrant 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 NexGel Warrant will offset losses from the drop in NexGel Warrant's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| NexGel Warrant vs. Nexgel Inc | NexGel Warrant vs. NLS Pharmaceutics AG | NexGel Warrant vs. NeuroSense Therapeutics Ltd | NexGel Warrant vs. Pasithea Therapeutics 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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