Correlation Between Capri Holdings and Guggenheim Alpha

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

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

Diversification Opportunities for Capri Holdings and Guggenheim Alpha

-0.14

Correlation Coefficient

Capri Holdings  Guggenheim Alpha

Good diversification

The 3 months correlation between Capri and Guggenheim is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Guggenheim Alpha Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Alpha Opp 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 Guggenheim Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Alpha Opp has no effect on the direction of Capri Holdings i.e., Capri Holdings and Guggenheim Alpha go up and down completely randomly.

Pair Corralation between Capri Holdings and Guggenheim Alpha

Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Guggenheim Alpha. In addition to that, Capri Holdings is 4.16 times more volatile than Guggenheim Alpha Opportunity. It trades about -0.05 of its total potential returns per unit of risk. Guggenheim Alpha Opportunity is currently generating about -0.02 per unit of volatility. If you would invest  1,940  in Guggenheim Alpha Opportunity on November 28, 2024 and sell it today you would lose (20.00) from holding Guggenheim Alpha Opportunity or give up 1.03% 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.  Guggenheim Alpha Opportunity

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.

Guggenheim Alpha Opp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guggenheim Alpha Opportunity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Guggenheim Alpha 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 Guggenheim Alpha

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

The idea behind Capri Holdings and Guggenheim Alpha Opportunity 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.