Correlation Between Capri Holdings and T Rex

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

By analyzing existing cross correlation between Capri Holdings and T Rex 2X Long, you can compare the effects of market volatilities on Capri Holdings and T Rex 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 T Rex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and T Rex.

Diversification Opportunities for Capri Holdings and T Rex

0.3

Correlation Coefficient

Capri Holdings  T Rex

Weak diversification

The 3 months correlation between Capri and NVDX is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and T Rex 2X Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rex 2X 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 T Rex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rex 2X has no effect on the direction of Capri Holdings i.e., Capri Holdings and T Rex go up and down completely randomly.

Pair Corralation between Capri Holdings and T Rex

Given the investment horizon of 90 days Capri Holdings is expected to generate 0.42 times more return on investment than T Rex. However, Capri Holdings is 2.38 times less risky than T Rex. It trades about 0.02 of its potential returns per unit of risk. T Rex 2X Long is currently generating about -0.07 per unit of risk. If you would invest  2,052  in Capri Holdings on December 28, 2024 and sell it today you would earn a total of  7.00  from holding Capri Holdings or generate 0.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Capri Holdings  vs.  T Rex 2X Long

Capri Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Capri Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

T Rex 2X

Risk-Adjusted Performance

Very Weak

Over the last 90 days T Rex 2X Long 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 Etf's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with Capri Holdings and T Rex

The main advantage of trading using opposite Capri Holdings and T Rex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, T Rex 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 T Rex will offset losses from the drop in T Rex's long position.

The idea behind Capri Holdings and T Rex 2X Long 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.