Correlation Between Capri Holdings and APPLE

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

Diversification Opportunities for Capri Holdings and APPLE

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between Capri and APPLE is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and APPLE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLE INC 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 APPLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLE INC has no effect on the direction of Capri Holdings i.e., Capri Holdings and APPLE go up and down completely randomly.

Pair Corralation between Capri Holdings and APPLE

Given the investment horizon of 90 days Capri Holdings is expected to under-perform the APPLE. In addition to that, Capri Holdings is 2.98 times more volatile than APPLE INC. It trades about -0.23 of its total potential returns per unit of risk. APPLE INC is currently generating about 0.21 per unit of volatility. If you would invest  6,260  in APPLE INC on November 28, 2024 and sell it today you would earn a total of  323.00  from holding APPLE INC or generate 5.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Capri Holdings  vs.  APPLE INC

 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.
APPLE INC 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days APPLE INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, APPLE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Capri Holdings and APPLE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Capri Holdings and APPLE

The main advantage of trading using opposite Capri Holdings and APPLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, APPLE 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 APPLE will offset losses from the drop in APPLE's long position.
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The idea behind Capri Holdings and APPLE INC 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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