Correlation Between Capri Holdings and OFX Group

Can any of the company-specific risk be diversified away by investing in both Capri Holdings and OFX 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 OFX 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 OFX Group Ltd, you can compare the effects of market volatilities on Capri Holdings and OFX 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 OFX Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and OFX Group.

Diversification Opportunities for Capri Holdings and OFX Group

-0.26

Correlation Coefficient

Capri Holdings  OFX Group

Very good diversification

The 3 months correlation between Capri and OFX is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX 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 OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of Capri Holdings i.e., Capri Holdings and OFX Group go up and down completely randomly.

Pair Corralation between Capri Holdings and OFX Group

If you would invest  435.00  in OFX Group Ltd on November 28, 2024 and sell it today you would earn a total of  0.00  from holding OFX Group Ltd or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Capri Holdings  vs.  OFX Group Ltd

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.

OFX Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days OFX Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, OFX Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Capri Holdings and OFX Group

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

The idea behind Capri Holdings and OFX Group Ltd 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.