Correlation Between Capri Holdings and VF

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

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

Diversification Opportunities for Capri Holdings and VF

0.69

Correlation Coefficient

Capri Holdings  VF

Poor diversification

The 3 months correlation between Capri and VF is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings Limited and VF Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VF Corporation 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 Limited are associated (or correlated) with VF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VF Corporation has no effect on the direction of Capri Holdings i.e., Capri Holdings and VF go up and down completely randomly.

Pair Corralation between Capri Holdings and VF

Assuming the 90 days horizon Capri Holdings Limited is expected to generate 1.07 times more return on investment than VF. However, Capri Holdings is 1.07 times more volatile than VF Corporation. It trades about -0.01 of its potential returns per unit of risk. VF Corporation is currently generating about -0.13 per unit of risk. If you would invest  2,011  in Capri Holdings Limited on December 24, 2024 and sell it today you would lose (122.00) from holding Capri Holdings Limited or give up 6.07% of portfolio value over 90 days.

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

Capri Holdings Limited  vs.  VF Corp.

Capri Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capri Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Capri Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

VF Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days VF Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Capri Holdings and VF

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

The idea behind Capri Holdings Limited and VF Corporation 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.