Correlation Between Capri Holdings and Stemsation International
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Stemsation International 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 Stemsation International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Stemsation International, you can compare the effects of market volatilities on Capri Holdings and Stemsation International 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 Stemsation International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Stemsation International.
Diversification Opportunities for Capri Holdings and Stemsation International
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capri and Stemsation is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Stemsation International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stemsation International 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 Stemsation International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stemsation International has no effect on the direction of Capri Holdings i.e., Capri Holdings and Stemsation International go up and down completely randomly.
Pair Corralation between Capri Holdings and Stemsation International
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Stemsation International. But the stock apears to be less risky and, when comparing its historical volatility, Capri Holdings is 4.91 times less risky than Stemsation International. The stock trades about -0.02 of its potential returns per unit of risk. The Stemsation International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.10 in Stemsation International on November 27, 2024 and sell it today you would lose (0.53) from holding Stemsation International or give up 48.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capri Holdings vs. Stemsation International
Performance |
| Timeline |
| Capri Holdings |
| Stemsation International |
Capri Holdings and Stemsation International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Stemsation International
The main advantage of trading using opposite Capri Holdings and Stemsation International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Stemsation International 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 Stemsation International will offset losses from the drop in Stemsation International's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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