Correlation Between Capri Holdings and Lanvin Group

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

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

Diversification Opportunities for Capri Holdings and Lanvin Group

0.29

Correlation Coefficient

Capri Holdings  Lanvin Group

Modest diversification

The 3 months correlation between Capri and Lanvin is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Lanvin Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lanvin Group Holdings 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 Lanvin Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lanvin Group Holdings has no effect on the direction of Capri Holdings i.e., Capri Holdings and Lanvin Group go up and down completely randomly.

Pair Corralation between Capri Holdings and Lanvin Group

Given the investment horizon of 90 days Capri Holdings is expected to generate 0.42 times more return on investment than Lanvin Group. However, Capri Holdings is 2.38 times less risky than Lanvin Group. It trades about -0.12 of its potential returns per unit of risk. Lanvin Group Holdings is currently generating about -0.15 per unit of risk. If you would invest  2,426  in Capri Holdings on November 19, 2024 and sell it today you would lose (180.00) from holding Capri Holdings or give up 7.42% of portfolio value over 90 days.

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

Capri Holdings  vs.  Lanvin Group Holdings

Capri Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capri Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Capri Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Lanvin Group Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lanvin Group Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Lanvin Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capri Holdings and Lanvin Group

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

The idea behind Capri Holdings and Lanvin Group Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.