Correlation Between Lanvin Group and Capri Holdings

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

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

Diversification Opportunities for Lanvin Group and Capri Holdings

-0.07

Correlation Coefficient

Lanvin Group  Capri Holdings

Good diversification

The 3 months correlation between Lanvin and Capri is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lanvin Group Holdings and Capri Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri Holdings and Lanvin Group 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 Lanvin Group Holdings are associated (or correlated) with Capri Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capri Holdings has no effect on the direction of Lanvin Group i.e., Lanvin Group and Capri Holdings go up and down completely randomly.

Pair Corralation between Lanvin Group and Capri Holdings

Given the investment horizon of 90 days Lanvin Group Holdings is expected to generate 1.72 times more return on investment than Capri Holdings. However, Lanvin Group is 1.72 times more volatile than Capri Holdings. It trades about 0.06 of its potential returns per unit of risk. Capri Holdings is currently generating about 0.01 per unit of risk. If you would invest  196.00  in Lanvin Group Holdings on December 28, 2024 and sell it today you would earn a total of  26.00  from holding Lanvin Group Holdings or generate 13.27% return on investment over 90 days.

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

Lanvin Group Holdings  vs.  Capri Holdings

Lanvin Group Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lanvin Group Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Lanvin Group showed solid returns over the last few months and may actually be approaching a breakup point.

Capri Holdings

Risk-Adjusted Performance

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.

Pair Trading with Lanvin Group and Capri Holdings

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

The idea behind Lanvin Group Holdings and Capri Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.