Correlation Between Capri Holdings and ConocoPhillips

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

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

Diversification Opportunities for Capri Holdings and ConocoPhillips

-0.26

Correlation Coefficient

Capri Holdings  ConocoPhillips

Very good diversification

The 3 months correlation between Capri and ConocoPhillips is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips 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 ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Capri Holdings i.e., Capri Holdings and ConocoPhillips go up and down completely randomly.

Pair Corralation between Capri Holdings and ConocoPhillips

Given the investment horizon of 90 days Capri Holdings is expected to under-perform the ConocoPhillips. In addition to that, Capri Holdings is 3.67 times more volatile than ConocoPhillips. It trades about -0.05 of its total potential returns per unit of risk. ConocoPhillips is currently generating about -0.03 per unit of volatility. If you would invest  11,300  in ConocoPhillips on August 30, 2024 and sell it today you would lose (561.00) from holding ConocoPhillips or give up 4.96% of portfolio value over 90 days.

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

Capri Holdings  vs.  ConocoPhillips

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.

ConocoPhillips

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ConocoPhillips has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, ConocoPhillips is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Capri Holdings and ConocoPhillips

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

The idea behind Capri Holdings and ConocoPhillips 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.