Correlation Between Capri Holdings and Tele2 AB
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Tele2 AB 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 Tele2 AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Tele2 AB, you can compare the effects of market volatilities on Capri Holdings and Tele2 AB 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 Tele2 AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Tele2 AB.
Diversification Opportunities for Capri Holdings and Tele2 AB
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Capri and Tele2 is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Tele2 AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tele2 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 Tele2 AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tele2 AB has no effect on the direction of Capri Holdings i.e., Capri Holdings and Tele2 AB go up and down completely randomly.
Pair Corralation between Capri Holdings and Tele2 AB
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Tele2 AB. In addition to that, Capri Holdings is 3.0 times more volatile than Tele2 AB. It trades about -0.03 of its total potential returns per unit of risk. Tele2 AB is currently generating about 0.07 per unit of volatility. If you would invest 9,988 in Tele2 AB on September 1, 2024 and sell it today you would earn a total of 1,412 from holding Tele2 AB or generate 14.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Capri Holdings vs. Tele2 AB
Performance |
| Timeline |
| Capri Holdings |
| Tele2 AB |
Capri Holdings and Tele2 AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Tele2 AB
The main advantage of trading using opposite Capri Holdings and Tele2 AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Tele2 AB 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 Tele2 AB will offset losses from the drop in Tele2 AB's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| Tele2 AB vs. Checkin Group AB | Tele2 AB vs. Midsummer AB | Tele2 AB vs. Hexatronic Group AB | Tele2 AB vs. Cint Group 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 CEOs Directory module to screen CEOs from public companies around the world.
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