Correlation Between Capri Holdings and MDU Resources
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and MDU Resources 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 MDU Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and MDU Resources Group, you can compare the effects of market volatilities on Capri Holdings and MDU Resources 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 MDU Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and MDU Resources.
Diversification Opportunities for Capri Holdings and MDU Resources
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capri and MDU is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and MDU Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDU Resources Group 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 MDU Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDU Resources Group has no effect on the direction of Capri Holdings i.e., Capri Holdings and MDU Resources go up and down completely randomly.
Pair Corralation between Capri Holdings and MDU Resources
Given the investment horizon of 90 days Capri Holdings is expected to generate 2.29 times more return on investment than MDU Resources. However, Capri Holdings is 2.29 times more volatile than MDU Resources Group. It trades about 0.01 of its potential returns per unit of risk. MDU Resources Group is currently generating about -0.07 per unit of risk. If you would invest 2,096 in Capri Holdings on December 27, 2024 and sell it today you would lose (28.00) from holding Capri Holdings or give up 1.34% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Capri Holdings vs. MDU Resources Group
Performance |
Timeline |
Capri Holdings |
MDU Resources Group |
Capri Holdings and MDU Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Capri Holdings and MDU Resources
The main advantage of trading using opposite Capri Holdings and MDU Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, MDU Resources 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 MDU Resources will offset losses from the drop in MDU Resources' long position.Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
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Check out your portfolio center.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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