Correlation Between Capri Holdings and Wal Mart

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

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

Diversification Opportunities for Capri Holdings and Wal Mart

0.14

Correlation Coefficient

Capri Holdings  Wal Mart

Average diversification

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

Pair Corralation between Capri Holdings and Wal Mart

Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Wal Mart. In addition to that, Capri Holdings is 2.47 times more volatile than Wal Mart de Mxico. It trades about -0.02 of its total potential returns per unit of risk. Wal Mart de Mxico is currently generating about -0.02 per unit of volatility. If you would invest  6,856  in Wal Mart de Mxico on November 28, 2024 and sell it today you would lose (1,269) from holding Wal Mart de Mxico or give up 18.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Capri Holdings  vs.  Wal Mart de Mxico

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.

Wal Mart de

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wal Mart de Mxico are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Wal Mart may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Capri Holdings and Wal Mart

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

The idea behind Capri Holdings and Wal Mart de Mxico 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.