Correlation Between Carters and Capri Holdings
Can any of the company-specific risk be diversified away by investing in both Carters and Capri Holdings 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 Carters and Capri Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carters and Capri Holdings, you can compare the effects of market volatilities on Carters and Capri Holdings 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 Carters with a short position of Capri Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carters and Capri Holdings.
Diversification Opportunities for Carters and Capri Holdings
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Carters and Capri is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Carters and Capri Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri Holdings and Carters 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 Carters are associated (or correlated) with Capri Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capri Holdings has no effect on the direction of Carters i.e., Carters and Capri Holdings go up and down completely randomly.
Pair Corralation between Carters and Capri Holdings
Considering the 90-day investment horizon Carters is expected to under-perform the Capri Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Carters is 1.71 times less risky than Capri Holdings. The stock trades about -0.04 of its potential returns per unit of risk. The Capri Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,139 in Capri Holdings on August 27, 2024 and sell it today you would earn a total of 15.00 from holding Capri Holdings or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carters vs. Capri Holdings
Performance |
| Timeline |
| Carters |
| Capri Holdings |
Carters and Capri Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carters and Capri Holdings
The main advantage of trading using opposite Carters and Capri Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carters position performs unexpectedly, Capri Holdings 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 Capri Holdings will offset losses from the drop in Capri Holdings' long position.| Carters vs. VF Corporation | Carters vs. Levi Strauss Co | Carters vs. Under Armour A | Carters vs. Oxford Industries |
| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |