Correlation Between Salvatore Ferragamo and Capri Holdings

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

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

Diversification Opportunities for Salvatore Ferragamo and Capri Holdings

0.1

Correlation Coefficient

Salvatore Ferragamo  Capri Holdings

Average diversification

The 3 months correlation between Salvatore and Capri is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Salvatore Ferragamo SpA and Capri Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri Holdings and Salvatore Ferragamo 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 Salvatore Ferragamo SpA 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 Salvatore Ferragamo i.e., Salvatore Ferragamo and Capri Holdings go up and down completely randomly.

Pair Corralation between Salvatore Ferragamo and Capri Holdings

Assuming the 90 days horizon Salvatore Ferragamo is expected to generate 13.13 times less return on investment than Capri Holdings. In addition to that, Salvatore Ferragamo is 1.04 times more volatile than Capri Holdings. It trades about 0.0 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Salvatore Ferragamo SpA  vs.  Capri Holdings

Salvatore Ferragamo SpA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salvatore Ferragamo SpA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Salvatore Ferragamo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 Salvatore Ferragamo and Capri Holdings

The main advantage of trading using opposite Salvatore Ferragamo and Capri Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salvatore Ferragamo 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 Salvatore Ferragamo SpA 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.