Correlation Between Capri Holdings and Grupo Aeroportuario

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

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

Diversification Opportunities for Capri Holdings and Grupo Aeroportuario

-0.6

Correlation Coefficient

Capri Holdings  Grupo Aeroportuario

Excellent diversification

The 3 months correlation between Capri and Grupo is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Grupo Aeroportuario del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aeroportuario del 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 Grupo Aeroportuario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aeroportuario del has no effect on the direction of Capri Holdings i.e., Capri Holdings and Grupo Aeroportuario go up and down completely randomly.

Pair Corralation between Capri Holdings and Grupo Aeroportuario

Given the investment horizon of 90 days Capri Holdings is expected to generate 2.3 times more return on investment than Grupo Aeroportuario. However, Capri Holdings is 2.3 times more volatile than Grupo Aeroportuario del. It trades about 0.19 of its potential returns per unit of risk. Grupo Aeroportuario del is currently generating about 0.22 per unit of risk. If you would invest  2,048  in Capri Holdings on August 30, 2024 and sell it today you would earn a total of  304.00  from holding Capri Holdings or generate 14.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Capri Holdings  vs.  Grupo Aeroportuario del

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.

Grupo Aeroportuario del

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aeroportuario del are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Grupo Aeroportuario showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capri Holdings and Grupo Aeroportuario

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

The idea behind Capri Holdings and Grupo Aeroportuario del 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.