Correlation Between Capri Holdings and Resource Base
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Resource Base 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 Resource Base into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Resource Base, you can compare the effects of market volatilities on Capri Holdings and Resource Base 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 Resource Base. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Resource Base.
Diversification Opportunities for Capri Holdings and Resource Base
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capri and Resource is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Resource Base in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resource Base 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 Resource Base. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resource Base has no effect on the direction of Capri Holdings i.e., Capri Holdings and Resource Base go up and down completely randomly.
Pair Corralation between Capri Holdings and Resource Base
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Resource Base. In addition to that, Capri Holdings is 1.54 times more volatile than Resource Base. It trades about -0.12 of its total potential returns per unit of risk. Resource Base is currently generating about 0.12 per unit of volatility. If you would invest 3.40 in Resource Base on August 29, 2024 and sell it today you would earn a total of 0.80 from holding Resource Base or generate 23.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Capri Holdings vs. Resource Base
Performance |
| Timeline |
| Capri Holdings |
| Resource Base |
Capri Holdings and Resource Base Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Resource Base
The main advantage of trading using opposite Capri Holdings and Resource Base positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Resource Base 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 Resource Base will offset losses from the drop in Resource Base's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| Resource Base vs. Talisman Mining | Resource Base vs. Queste Communications | Resource Base vs. Global Health | Resource Base vs. Janison Education Group |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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