Correlation Between H+M HEN+MAUUNSPADR and Capri Holdings

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

By analyzing existing cross correlation between HM HENMAUUNSPADR 15 and Capri Holdings Limited, you can compare the effects of market volatilities on H+M HEN+MAUUNSPADR 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 H+M HEN+MAUUNSPADR with a short position of Capri Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of H+M HEN+MAUUNSPADR and Capri Holdings.

Diversification Opportunities for H+M HEN+MAUUNSPADR and Capri Holdings

0.7

Correlation Coefficient

H+M HEN+MAUUNSPADR  Capri Holdings

Poor diversification

The 3 months correlation between H+M and Capri is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding HM HENMAUUNSPADR 15 and Capri Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri Holdings and H+M HEN+MAUUNSPADR 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 HM HENMAUUNSPADR 15 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 H+M HEN+MAUUNSPADR i.e., H+M HEN+MAUUNSPADR and Capri Holdings go up and down completely randomly.

Pair Corralation between H+M HEN+MAUUNSPADR and Capri Holdings

Assuming the 90 days trading horizon HM HENMAUUNSPADR 15 is expected to generate 0.3 times more return on investment than Capri Holdings. However, HM HENMAUUNSPADR 15 is 3.38 times less risky than Capri Holdings. It trades about -0.02 of its potential returns per unit of risk. Capri Holdings Limited is currently generating about -0.04 per unit of risk. If you would invest  278.00  in HM HENMAUUNSPADR 15 on September 3, 2024 and sell it today you would lose (12.00) from holding HM HENMAUUNSPADR 15 or give up 4.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

HM HENMAUUNSPADR 15  vs.  Capri Holdings Limited

H+M HEN+MAUUNSPADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HM HENMAUUNSPADR 15 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, H+M HEN+MAUUNSPADR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Capri Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capri Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with H+M HEN+MAUUNSPADR and Capri Holdings

The main advantage of trading using opposite H+M HEN+MAUUNSPADR and Capri Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H+M HEN+MAUUNSPADR 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.

The idea behind HM HENMAUUNSPADR 15 and Capri Holdings Limited 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.