Correlation Between Capri Holdings and Franklin Real

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

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

Diversification Opportunities for Capri Holdings and Franklin Real

-0.05

Correlation Coefficient

Capri Holdings  Franklin Real

Good diversification

The 3 months correlation between Capri and Franklin is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Franklin Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Real Estate 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 Franklin Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Real Estate has no effect on the direction of Capri Holdings i.e., Capri Holdings and Franklin Real go up and down completely randomly.

Pair Corralation between Capri Holdings and Franklin Real

Given the investment horizon of 90 days Capri Holdings is expected to generate 2.16 times more return on investment than Franklin Real. However, Capri Holdings is 2.16 times more volatile than Franklin Real Estate. It trades about -0.07 of its potential returns per unit of risk. Franklin Real Estate is currently generating about -0.15 per unit of risk. If you would invest  2,341  in Capri Holdings on November 28, 2024 and sell it today you would lose (313.00) from holding Capri Holdings or give up 13.37% 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.  Franklin Real Estate

Capri Holdings

Risk-Adjusted Performance

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 March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Franklin Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Capri Holdings and Franklin Real

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

The idea behind Capri Holdings and Franklin Real Estate 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.