Correlation Between Tillys and Capri Holdings

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

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

Diversification Opportunities for Tillys and Capri Holdings

0.5

Correlation Coefficient

Tillys  Capri Holdings

Very weak diversification

The 3 months correlation between Tillys and Capri is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Tillys Inc and Capri Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri Holdings and Tillys 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 Tillys Inc 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 Tillys i.e., Tillys and Capri Holdings go up and down completely randomly.

Pair Corralation between Tillys and Capri Holdings

Given the investment horizon of 90 days Tillys Inc is expected to under-perform the Capri Holdings. In addition to that, Tillys is 1.19 times more volatile than Capri Holdings. It trades about -0.2 of its total potential returns per unit of risk. Capri Holdings is currently generating about 0.02 per unit of volatility. If you would invest  2,052  in Capri Holdings on December 28, 2024 and sell it today you would earn a total of  7.00  from holding Capri Holdings or generate 0.34% return on investment over 90 days.

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

Tillys Inc  vs.  Capri Holdings

Tillys Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tillys Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Capri Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Capri Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Tillys and Capri Holdings

The main advantage of trading using opposite Tillys and Capri Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tillys 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 Tillys Inc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.