Correlation Between Signet Jewelers and Capri Holdings

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

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

Diversification Opportunities for Signet Jewelers and Capri Holdings

0.29

Correlation Coefficient

Signet Jewelers  Capri Holdings

Modest diversification

The 3 months correlation between Signet and Capri is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Signet Jewelers and Capri Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri Holdings and Signet Jewelers 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 Signet Jewelers 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 Signet Jewelers i.e., Signet Jewelers and Capri Holdings go up and down completely randomly.

Pair Corralation between Signet Jewelers and Capri Holdings

Considering the 90-day investment horizon Signet Jewelers is expected to generate 0.82 times more return on investment than Capri Holdings. However, Signet Jewelers is 1.22 times less risky than Capri Holdings. It trades about 0.13 of its potential returns per unit of risk. Capri Holdings is currently generating about 0.09 per unit of risk. If you would invest  6,677  in Signet Jewelers on May 15, 2025 and sell it today you would earn a total of  1,651  from holding Signet Jewelers or generate 24.73% return on investment over 90 days.

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

Signet Jewelers  vs.  Capri Holdings

Signet Jewelers

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Signet Jewelers are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Signet Jewelers reported solid returns over the last few months and may actually be approaching a breakup point.

Capri Holdings

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Capri Holdings are ranked lower than 7 (%) 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 Signet Jewelers and Capri Holdings

The main advantage of trading using opposite Signet Jewelers and Capri Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Signet Jewelers 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 Signet Jewelers 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.