Correlation Between Capri Holdings and XNK

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

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

Diversification Opportunities for Capri Holdings and XNK

-0.5

Correlation Coefficient

Capri Holdings  XNK

Very good diversification

The 3 months correlation between Capri and XNK is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and XNK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XNK 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 XNK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XNK has no effect on the direction of Capri Holdings i.e., Capri Holdings and XNK go up and down completely randomly.

Pair Corralation between Capri Holdings and XNK

If you would invest  0.13  in XNK on August 30, 2024 and sell it today you would earn a total of  0.00  from holding XNK or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Capri Holdings  vs.  XNK

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.

XNK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XNK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, XNK is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Capri Holdings and XNK

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

The idea behind Capri Holdings and XNK 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.