Correlation Between Capri Holdings and Prudential Financial

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

By analyzing existing cross correlation between Capri Holdings and Prudential Financial 5950, you can compare the effects of market volatilities on Capri Holdings and Prudential Financial 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 Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Prudential Financial.

Diversification Opportunities for Capri Holdings and Prudential Financial

-0.07

Correlation Coefficient

Capri Holdings  Prudential Financial

Good diversification

The 3 months correlation between Capri and Prudential is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Prudential Financial 5950 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 5950 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial 5950 has no effect on the direction of Capri Holdings i.e., Capri Holdings and Prudential Financial go up and down completely randomly.

Pair Corralation between Capri Holdings and Prudential Financial

Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Prudential Financial. In addition to that, Capri Holdings is 4.64 times more volatile than Prudential Financial 5950. It trades about -0.07 of its total potential returns per unit of risk. Prudential Financial 5950 is currently generating about -0.07 per unit of volatility. If you would invest  2,564  in Prudential Financial 5950 on November 28, 2024 and sell it today you would lose (69.00) from holding Prudential Financial 5950 or give up 2.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Capri Holdings  vs.  Prudential Financial 5950

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Prudential Financial 5950

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prudential Financial 5950 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Prudential Financial is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Capri Holdings and Prudential Financial

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

The idea behind Capri Holdings and Prudential Financial 5950 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.