Correlation Between MCBC Holdings and Capri Holdings

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

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

Diversification Opportunities for MCBC Holdings and Capri Holdings

0.64

Correlation Coefficient

MCBC Holdings  Capri Holdings

Poor diversification

The 3 months correlation between MCBC and Capri is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding MCBC Holdings and Capri Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri Holdings and MCBC 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 MCBC Holdings 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 MCBC Holdings i.e., MCBC Holdings and Capri Holdings go up and down completely randomly.

Pair Corralation between MCBC Holdings and Capri Holdings

Given the investment horizon of 90 days MCBC Holdings is expected to generate 1.22 times less return on investment than Capri Holdings. In addition to that, MCBC Holdings is 1.08 times more volatile than Capri Holdings. It trades about 0.09 of its total potential returns per unit of risk. Capri Holdings is currently generating about 0.12 per unit of volatility. If you would invest  1,555  in Capri Holdings on May 2, 2025 and sell it today you would earn a total of  304.00  from holding Capri Holdings or generate 19.55% return on investment over 90 days.

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

MCBC Holdings  vs.  Capri Holdings

MCBC Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MCBC Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, MCBC Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Capri Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capri Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Capri Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MCBC Holdings and Capri Holdings

The main advantage of trading using opposite MCBC Holdings and Capri Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCBC Holdings 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 MCBC Holdings 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.