Correlation Between Capri Holdings and Teixeira Duarte

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Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Teixeira Duarte 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 Teixeira Duarte into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Teixeira Duarte, you can compare the effects of market volatilities on Capri Holdings and Teixeira Duarte 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 Teixeira Duarte. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Teixeira Duarte.

Diversification Opportunities for Capri Holdings and Teixeira Duarte

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between Capri and Teixeira is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Teixeira Duarte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teixeira Duarte 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 Teixeira Duarte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teixeira Duarte has no effect on the direction of Capri Holdings i.e., Capri Holdings and Teixeira Duarte go up and down completely randomly.

Pair Corralation between Capri Holdings and Teixeira Duarte

Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Teixeira Duarte. In addition to that, Capri Holdings is 1.27 times more volatile than Teixeira Duarte. It trades about -0.02 of its total potential returns per unit of risk. Teixeira Duarte is currently generating about 0.03 per unit of volatility. If you would invest  8.88  in Teixeira Duarte on November 27, 2024 and sell it today you would earn a total of  2.12  from holding Teixeira Duarte or generate 23.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.21%
ValuesDaily Returns

Capri Holdings  vs.  Teixeira Duarte

 Performance 
       Timeline  
Capri Holdings 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Capri Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.
Teixeira Duarte 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Teixeira Duarte are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Teixeira Duarte unveiled solid returns over the last few months and may actually be approaching a breakup point.

Capri Holdings and Teixeira Duarte Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Capri Holdings and Teixeira Duarte

The main advantage of trading using opposite Capri Holdings and Teixeira Duarte positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Teixeira Duarte 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 Teixeira Duarte will offset losses from the drop in Teixeira Duarte's long position.
The idea behind Capri Holdings and Teixeira Duarte pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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