Correlation Between Capri Holdings and IShares Treasury

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

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

Diversification Opportunities for Capri Holdings and IShares Treasury

-0.5

Correlation Coefficient

Capri Holdings  IShares Treasury

Very good diversification

The 3 months correlation between Capri and IShares is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and iShares Treasury Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Treasury Floating 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 IShares Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Treasury Floating has no effect on the direction of Capri Holdings i.e., Capri Holdings and IShares Treasury go up and down completely randomly.

Pair Corralation between Capri Holdings and IShares Treasury

Given the investment horizon of 90 days Capri Holdings is expected to generate 175.41 times more return on investment than IShares Treasury. However, Capri Holdings is 175.41 times more volatile than iShares Treasury Floating. It trades about 0.01 of its potential returns per unit of risk. iShares Treasury Floating is currently generating about 0.87 per unit of risk. If you would invest  2,052  in Capri Holdings on December 30, 2024 and sell it today you would lose (22.00) from holding Capri Holdings or give up 1.07% of portfolio value over 90 days.

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

Capri Holdings  vs.  iShares Treasury Floating

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 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.

iShares Treasury Floating

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Treasury Floating are ranked lower than 68 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, IShares Treasury is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Capri Holdings and IShares Treasury

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

The idea behind Capri Holdings and iShares Treasury Floating 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .