Correlation Between Capri Holdings and Woolworths Group
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Woolworths 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 Woolworths 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 Woolworths Group Limited, you can compare the effects of market volatilities on Capri Holdings and Woolworths 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 Woolworths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Woolworths Group.
Diversification Opportunities for Capri Holdings and Woolworths Group
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capri and Woolworths is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Woolworths Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Group 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 Woolworths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths Group has no effect on the direction of Capri Holdings i.e., Capri Holdings and Woolworths Group go up and down completely randomly.
Pair Corralation between Capri Holdings and Woolworths Group
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Woolworths Group. In addition to that, Capri Holdings is 3.2 times more volatile than Woolworths Group Limited. It trades about -0.03 of its total potential returns per unit of risk. Woolworths Group Limited is currently generating about 0.0 per unit of volatility. If you would invest 1,981 in Woolworths Group Limited on August 29, 2024 and sell it today you would lose (131.00) from holding Woolworths Group Limited or give up 6.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.22% |
| Values | Daily Returns |
Capri Holdings vs. Woolworths Group Limited
Performance |
| Timeline |
| Capri Holdings |
| Woolworths Group |
Capri Holdings and Woolworths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Woolworths Group
The main advantage of trading using opposite Capri Holdings and Woolworths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Woolworths 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 Woolworths Group will offset losses from the drop in Woolworths Group'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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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