Correlation Between Capri Holdings and Rottneros
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Rottneros 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 Rottneros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Rottneros AB, you can compare the effects of market volatilities on Capri Holdings and Rottneros 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 Rottneros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Rottneros.
Diversification Opportunities for Capri Holdings and Rottneros
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capri and Rottneros is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Rottneros AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rottneros AB 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 Rottneros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rottneros AB has no effect on the direction of Capri Holdings i.e., Capri Holdings and Rottneros go up and down completely randomly.
Pair Corralation between Capri Holdings and Rottneros
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Rottneros. In addition to that, Capri Holdings is 2.56 times more volatile than Rottneros AB. It trades about -0.16 of its total potential returns per unit of risk. Rottneros AB is currently generating about -0.33 per unit of volatility. If you would invest 781.00 in Rottneros AB on January 18, 2025 and sell it today you would lose (196.00) from holding Rottneros AB or give up 25.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capri Holdings vs. Rottneros AB
Performance |
| Timeline |
| Capri Holdings |
| Rottneros AB |
Capri Holdings and Rottneros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Rottneros
The main advantage of trading using opposite Capri Holdings and Rottneros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Rottneros 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 Rottneros will offset losses from the drop in Rottneros' long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| Rottneros vs. BillerudKorsnas AB | Rottneros vs. SSAB AB | Rottneros vs. Svenska Cellulosa Aktiebolaget | Rottneros vs. Axfood AB |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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