Correlation Between Capri Holdings and Fossil

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

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

Diversification Opportunities for Capri Holdings and Fossil

0.67

Correlation Coefficient

Capri Holdings  Fossil

Poor diversification

The 3 months correlation between Capri and Fossil is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Fossil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fossil Group 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 Fossil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fossil Group has no effect on the direction of Capri Holdings i.e., Capri Holdings and Fossil go up and down completely randomly.

Pair Corralation between Capri Holdings and Fossil

Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Fossil. But the stock apears to be less risky and, when comparing its historical volatility, Capri Holdings is 3.27 times less risky than Fossil. The stock trades about -0.33 of its potential returns per unit of risk. The Fossil Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  91.00  in Fossil Group on February 8, 2024 and sell it today you would earn a total of  6.00  from holding Fossil Group or generate 6.59% return on investment over 90 days.

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

Capri Holdings  vs.  Fossil Group

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 conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Fossil Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fossil Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Fossil is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Capri Holdings and Fossil

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

The idea behind Capri Holdings and Fossil Group 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.