Correlation Between Capri Holdings and Cruzeiro

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

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

Diversification Opportunities for Capri Holdings and Cruzeiro

0.85

Correlation Coefficient

Capri Holdings  Cruzeiro

Very poor diversification

The 3 months correlation between Capri and Cruzeiro is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings Limited and Cruzeiro do Sul in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cruzeiro do Sul 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 Limited are associated (or correlated) with Cruzeiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cruzeiro do Sul has no effect on the direction of Capri Holdings i.e., Capri Holdings and Cruzeiro go up and down completely randomly.

Pair Corralation between Capri Holdings and Cruzeiro

Assuming the 90 days trading horizon Capri Holdings is expected to generate 1.33 times less return on investment than Cruzeiro. But when comparing it to its historical volatility, Capri Holdings Limited is 1.17 times less risky than Cruzeiro. It trades about 0.18 of its potential returns per unit of risk. Cruzeiro do Sul is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  365.00  in Cruzeiro do Sul on April 22, 2025 and sell it today you would earn a total of  120.00  from holding Cruzeiro do Sul or generate 32.88% return on investment over 90 days.

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

Capri Holdings Limited  vs.  Cruzeiro do Sul

Capri Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capri Holdings Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Capri Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Cruzeiro do Sul

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cruzeiro do Sul are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cruzeiro unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capri Holdings and Cruzeiro

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

The idea behind Capri Holdings Limited and Cruzeiro do Sul 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.