Correlation Between Capri Holdings and Global Industrial

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

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

Diversification Opportunities for Capri Holdings and Global Industrial

-0.07

Correlation Coefficient

Capri Holdings  Global Industrial

Good diversification

The 3 months correlation between Capri and Global is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Global Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Industrial 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 Global Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Industrial has no effect on the direction of Capri Holdings i.e., Capri Holdings and Global Industrial go up and down completely randomly.

Pair Corralation between Capri Holdings and Global Industrial

Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Global Industrial. In addition to that, Capri Holdings is 2.31 times more volatile than Global Industrial Co. It trades about -0.23 of its total potential returns per unit of risk. Global Industrial Co is currently generating about -0.15 per unit of volatility. If you would invest  2,540  in Global Industrial Co on November 28, 2024 and sell it today you would lose (121.00) from holding Global Industrial Co or give up 4.76% 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.  Global Industrial Co

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 latest abnormal performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Global Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Capri Holdings and Global Industrial

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

The idea behind Capri Holdings and Global Industrial Co 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.