Correlation Between Capri Holdings and Silicon Laboratories

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

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

Diversification Opportunities for Capri Holdings and Silicon Laboratories

0.23

Correlation Coefficient

Capri Holdings  Silicon Laboratories

Modest diversification

The 3 months correlation between Capri and Silicon is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Silicon Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Laboratories 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 Silicon Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Laboratories has no effect on the direction of Capri Holdings i.e., Capri Holdings and Silicon Laboratories go up and down completely randomly.

Pair Corralation between Capri Holdings and Silicon Laboratories

Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Silicon Laboratories. In addition to that, Capri Holdings is 1.44 times more volatile than Silicon Laboratories. It trades about -0.02 of its total potential returns per unit of risk. Silicon Laboratories is currently generating about 0.0 per unit of volatility. If you would invest  17,341  in Silicon Laboratories on November 28, 2024 and sell it today you would lose (2,915) from holding Silicon Laboratories or give up 16.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Capri Holdings  vs.  Silicon Laboratories

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.

Silicon Laboratories

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Silicon Laboratories are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Silicon Laboratories sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capri Holdings and Silicon Laboratories

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

The idea behind Capri Holdings and Silicon Laboratories 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.