Correlation Between T-MOBILE and Capri Holdings

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

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

Diversification Opportunities for T-MOBILE and Capri Holdings

-0.67

Correlation Coefficient

T-MOBILE  Capri Holdings

Excellent diversification

The 3 months correlation between T-MOBILE and Capri is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE US and Capri Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri Holdings and T-MOBILE 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 T MOBILE US 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 T-MOBILE i.e., T-MOBILE and Capri Holdings go up and down completely randomly.

Pair Corralation between T-MOBILE and Capri Holdings

Assuming the 90 days trading horizon T MOBILE US is expected to under-perform the Capri Holdings. But the stock apears to be less risky and, when comparing its historical volatility, T MOBILE US is 1.9 times less risky than Capri Holdings. The stock trades about -0.1 of its potential returns per unit of risk. The Capri Holdings Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,885  in Capri Holdings Limited on October 11, 2024 and sell it today you would earn a total of  170.00  from holding Capri Holdings Limited or generate 9.02% return on investment over 90 days.

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

T MOBILE US  vs.  Capri Holdings Limited

T MOBILE US

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE US are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, T-MOBILE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Capri Holdings

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with T-MOBILE and Capri Holdings

The main advantage of trading using opposite T-MOBILE and Capri Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T-MOBILE 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 T MOBILE US and Capri Holdings Limited 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.