Correlation Between Capri Holdings and Snap

Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Snap 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 Snap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Capri Holdings and Snap Inc, you can compare the effects of market volatilities on Capri Holdings and Snap 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 Snap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Snap.

Diversification Opportunities for Capri Holdings and Snap

-0.51

Correlation Coefficient

Capri Holdings  Snap

Excellent diversification

The 3 months correlation between Capri and Snap is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Snap Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap 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 Snap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snap Inc has no effect on the direction of Capri Holdings i.e., Capri Holdings and Snap go up and down completely randomly.

Pair Corralation between Capri Holdings and Snap

Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Snap. In addition to that, Capri Holdings is 2.06 times more volatile than Snap Inc. It trades about -0.05 of its total potential returns per unit of risk. Snap Inc is currently generating about 0.12 per unit of volatility. If you would invest  934.00  in Snap Inc on August 30, 2024 and sell it today you would earn a total of  227.00  from holding Snap Inc or generate 24.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Capri Holdings  vs.  Snap Inc

Capri Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capri Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Snap Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Snap Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish basic indicators, Snap reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capri Holdings and Snap

The main advantage of trading using opposite Capri Holdings and Snap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Snap 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 Snap will offset losses from the drop in Snap's long position.

The idea behind Capri Holdings and Snap 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.