Correlation Between Capri Holdings and Buckle

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

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

Diversification Opportunities for Capri Holdings and Buckle

-0.62

Correlation Coefficient

Capri Holdings  Buckle

Excellent diversification

The 3 months correlation between Capri and Buckle is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Buckle Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buckle Inc 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 are associated (or correlated) with Buckle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buckle Inc has no effect on the direction of Capri Holdings i.e., Capri Holdings and Buckle go up and down completely randomly.

Pair Corralation between Capri Holdings and Buckle

Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Buckle. In addition to that, Capri Holdings is 2.05 times more volatile than Buckle Inc. It trades about -0.03 of its total potential returns per unit of risk. Buckle Inc is currently generating about 0.04 per unit of volatility. If you would invest  3,760  in Buckle Inc on September 20, 2024 and sell it today you would earn a total of  1,418  from holding Buckle Inc or generate 37.71% return on investment over 90 days.

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

Capri Holdings  vs.  Buckle Inc

Capri Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capri Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Buckle Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Buckle Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward-looking signals, Buckle exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capri Holdings and Buckle

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

The idea behind Capri Holdings and Buckle Inc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.