Correlation Between Capri Holdings and Swatch Group
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Swatch Group 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 Swatch Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Swatch Group AG, you can compare the effects of market volatilities on Capri Holdings and Swatch Group 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 Swatch Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Swatch Group.
Diversification Opportunities for Capri Holdings and Swatch Group
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Capri and Swatch is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Swatch Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swatch Group AG 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 Swatch Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swatch Group AG has no effect on the direction of Capri Holdings i.e., Capri Holdings and Swatch Group go up and down completely randomly.
Pair Corralation between Capri Holdings and Swatch Group
Given the investment horizon of 90 days Capri Holdings is expected to generate 1.61 times more return on investment than Swatch Group. However, Capri Holdings is 1.61 times more volatile than Swatch Group AG. It trades about 0.3 of its potential returns per unit of risk. Swatch Group AG is currently generating about 0.06 per unit of risk. If you would invest 2,061 in Capri Holdings on November 3, 2024 and sell it today you would earn a total of 417.00 from holding Capri Holdings or generate 20.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capri Holdings vs. Swatch Group AG
Performance |
| Timeline |
| Capri Holdings |
| Swatch Group AG |
Capri Holdings and Swatch Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Swatch Group
The main advantage of trading using opposite Capri Holdings and Swatch Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Swatch Group 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 Swatch Group will offset losses from the drop in Swatch Group's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| Swatch Group vs. Kering SA | Swatch Group vs. Burberry Group Plc | Swatch Group vs. Prada Spa PK | Swatch Group vs. Compagnie Financire Richemont |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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