Correlation Between Capri Holdings and Tradr 2X

Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Tradr 2X 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 Tradr 2X into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Capri Holdings and Tradr 2X

0.05

Correlation Coefficient

Capri Holdings  Tradr 2X

Significant diversification

The 3 months correlation between Capri and Tradr is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Tradr 2X Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradr 2X Long 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 Tradr 2X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradr 2X Long has no effect on the direction of Capri Holdings i.e., Capri Holdings and Tradr 2X go up and down completely randomly.

Pair Corralation between Capri Holdings and Tradr 2X

Given the investment horizon of 90 days Capri Holdings is expected to generate 2.21 times less return on investment than Tradr 2X. In addition to that, Capri Holdings is 1.05 times more volatile than Tradr 2X Long. It trades about 0.02 of its total potential returns per unit of risk. Tradr 2X Long is currently generating about 0.04 per unit of volatility. If you would invest  2,155  in Tradr 2X Long on December 28, 2024 and sell it today you would earn a total of  81.00  from holding Tradr 2X Long or generate 3.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	70.0%
Values	Daily Returns

Capri Holdings  vs.  Tradr 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.

Tradr 2X Long

Risk-Adjusted Performance

Insignificant

Over the last 90 days Tradr 2X Long has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very abnormal basic indicators, Tradr 2X may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Capri Holdings and Tradr 2X

The main advantage of trading using opposite Capri Holdings and Tradr 2X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Tradr 2X 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 Tradr 2X will offset losses from the drop in Tradr 2X's long position.

The idea behind Capri Holdings and Tradr 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.