Correlation Between Prada Spa and Capri Holdings
Can any of the company-specific risk be diversified away by investing in both Prada Spa 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 Prada Spa and Capri Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prada Spa PK and Capri Holdings, you can compare the effects of market volatilities on Prada Spa 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 Prada Spa with a short position of Capri Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prada Spa and Capri Holdings.
Diversification Opportunities for Prada Spa and Capri Holdings
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Prada and Capri is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Prada Spa PK and Capri Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri Holdings and Prada Spa 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 Prada Spa PK 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 Prada Spa i.e., Prada Spa and Capri Holdings go up and down completely randomly.
Pair Corralation between Prada Spa and Capri Holdings
Assuming the 90 days horizon Prada Spa is expected to generate 4.65 times less return on investment than Capri Holdings. But when comparing it to its historical volatility, Prada Spa PK is 1.44 times less risky than Capri Holdings. It trades about 0.09 of its potential returns per unit of risk. Capri Holdings is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,061 in Capri Holdings on November 3, 2024 and sell it today you would earn a total of 417.00 from holding Capri Holdings or generate 20.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prada Spa PK vs. Capri Holdings
Performance |
| Timeline |
| Prada Spa PK |
| Capri Holdings |
Prada Spa and Capri Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prada Spa and Capri Holdings
The main advantage of trading using opposite Prada Spa and Capri Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prada Spa 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.| Prada Spa vs. Chow Tai Fook | Prada Spa vs. Christian Dior SE | Prada Spa vs. Kering SA | Prada Spa vs. Christian Dior SE |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |