Correlation Between Capri Holdings and Optimism
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Optimism 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 Optimism into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Optimism, you can compare the effects of market volatilities on Capri Holdings and Optimism 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 Optimism. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Optimism.
Diversification Opportunities for Capri Holdings and Optimism
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capri and Optimism is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Optimism in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimism 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 Optimism. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimism has no effect on the direction of Capri Holdings i.e., Capri Holdings and Optimism go up and down completely randomly.
Pair Corralation between Capri Holdings and Optimism
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Optimism. But the stock apears to be less risky and, when comparing its historical volatility, Capri Holdings is 1.22 times less risky than Optimism. The stock trades about -0.03 of its potential returns per unit of risk. The Optimism is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 248.00 in Optimism on September 1, 2024 and sell it today you would lose (3.00) from holding Optimism or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Capri Holdings vs. Optimism
Performance |
| Timeline |
| Capri Holdings |
| Optimism |
Capri Holdings and Optimism Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Optimism
The main advantage of trading using opposite Capri Holdings and Optimism positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Optimism 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 Optimism will offset losses from the drop in Optimism's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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