Correlation Between Capri Holdings and NGM Biopharmaceutica

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

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

Diversification Opportunities for Capri Holdings and NGM Biopharmaceutica

0.0

Correlation Coefficient

Capri Holdings  NGM Biopharmaceutica

Pay attention - limited upside

The 3 months correlation between Capri and NGM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and NGM Biopharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGM Biopharmaceuticals 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 NGM Biopharmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGM Biopharmaceuticals has no effect on the direction of Capri Holdings i.e., Capri Holdings and NGM Biopharmaceutica go up and down completely randomly.

Pair Corralation between Capri Holdings and NGM Biopharmaceutica

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	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Capri Holdings  vs.  NGM Biopharmaceuticals

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 fairly strong basic indicators, Capri Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

NGM Biopharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days NGM Biopharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, NGM Biopharmaceutica is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Capri Holdings and NGM Biopharmaceutica

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

The idea behind Capri Holdings and NGM Biopharmaceuticals 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.