Correlation Between Capri Holdings and ProShares Short
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and ProShares Short 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 ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and ProShares Short Financials, you can compare the effects of market volatilities on Capri Holdings and ProShares Short 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 ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and ProShares Short.
Diversification Opportunities for Capri Holdings and ProShares Short
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capri and ProShares is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and ProShares Short Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short Fina 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 ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short Fina has no effect on the direction of Capri Holdings i.e., Capri Holdings and ProShares Short go up and down completely randomly.
Pair Corralation between Capri Holdings and ProShares Short
Given the investment horizon of 90 days Capri Holdings is expected to generate 2.43 times more return on investment than ProShares Short. However, Capri Holdings is 2.43 times more volatile than ProShares Short Financials. It trades about 0.19 of its potential returns per unit of risk. ProShares Short Financials is currently generating about -0.26 per unit of risk. If you would invest 2,048 in Capri Holdings on August 30, 2024 and sell it today you would earn a total of 304.00 from holding Capri Holdings or generate 14.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capri Holdings vs. ProShares Short Financials
Performance |
| Timeline |
| Capri Holdings |
| ProShares Short Fina |
Capri Holdings and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and ProShares Short
The main advantage of trading using opposite Capri Holdings and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, ProShares Short 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 ProShares Short will offset losses from the drop in ProShares Short's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| ProShares Short vs. ProShares Short MSCI | ProShares Short vs. ProShares Short MSCI | ProShares Short vs. ProShares Short SmallCap600 | ProShares Short vs. ProShares Short MidCap400 |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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