Correlation Between TheRealReal and Capri Holdings

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

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

Diversification Opportunities for TheRealReal and Capri Holdings

0.47

Correlation Coefficient

TheRealReal  Capri Holdings

Very weak diversification

The 3 months correlation between TheRealReal and Capri is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding TheRealReal and Capri Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri Holdings and TheRealReal 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 TheRealReal 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 TheRealReal i.e., TheRealReal and Capri Holdings go up and down completely randomly.

Pair Corralation between TheRealReal and Capri Holdings

Given the investment horizon of 90 days TheRealReal is expected to under-perform the Capri Holdings. In addition to that, TheRealReal is 1.47 times more volatile than Capri Holdings. It trades about -0.19 of its total potential returns per unit of risk. Capri Holdings is currently generating about 0.01 per unit of volatility. 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

TheRealReal  vs.  Capri Holdings

TheRealReal

Risk-Adjusted Performance

Very Weak

Over the last 90 days TheRealReal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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.

Pair Trading with TheRealReal and Capri Holdings

The main advantage of trading using opposite TheRealReal and Capri Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TheRealReal 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 TheRealReal 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.