Correlation Between Xcel Brands and Capri Holdings
Can any of the company-specific risk be diversified away by investing in both Xcel Brands 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 Xcel Brands and Capri Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xcel Brands and Capri Holdings, you can compare the effects of market volatilities on Xcel Brands 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 Xcel Brands with a short position of Capri Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xcel Brands and Capri Holdings.
Diversification Opportunities for Xcel Brands and Capri Holdings
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Xcel and Capri is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Xcel Brands and Capri Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri Holdings and Xcel Brands 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 Xcel Brands 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 Xcel Brands i.e., Xcel Brands and Capri Holdings go up and down completely randomly.
Pair Corralation between Xcel Brands and Capri Holdings
Given the investment horizon of 90 days Xcel Brands is expected to under-perform the Capri Holdings. In addition to that, Xcel Brands is 2.11 times more volatile than Capri Holdings. It trades about -0.42 of its total potential returns per unit of risk. Capri Holdings is currently generating about 0.13 per unit of volatility. If you would invest 2,004 in Capri Holdings on September 21, 2024 and sell it today you would earn a total of 151.00 from holding Capri Holdings or generate 7.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xcel Brands vs. Capri Holdings
Performance |
| Timeline |
| Xcel Brands |
| Capri Holdings |
Xcel Brands and Capri Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xcel Brands and Capri Holdings
The main advantage of trading using opposite Xcel Brands and Capri Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xcel Brands 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.| Xcel Brands vs. Capri Holdings | Xcel Brands vs. Movado Group | Xcel Brands vs. Tapestry | Xcel Brands vs. Brilliant Earth Group |
| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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