Correlation Between Under Armour and Capri Holdings

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

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

Diversification Opportunities for Under Armour and Capri Holdings

0.7

Correlation Coefficient

Under Armour  Capri Holdings

Poor diversification

The 3 months correlation between Under and Capri is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour and Capri Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri Holdings and Under Armour 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 Under Armour 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 Under Armour i.e., Under Armour and Capri Holdings go up and down completely randomly.

Pair Corralation between Under Armour and Capri Holdings

Assuming the 90 days trading horizon Under Armour is expected to generate 1.96 times less return on investment than Capri Holdings. But when comparing it to its historical volatility, Under Armour is 1.4 times less risky than Capri Holdings. It trades about 0.13 of its potential returns per unit of risk. Capri Holdings Limited is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  8,554  in Capri Holdings Limited on April 22, 2025 and sell it today you would earn a total of  2,050  from holding Capri Holdings Limited or generate 23.97% return on investment over 90 days.

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

Under Armour  vs.  Capri Holdings Limited

Under Armour

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Under Armour are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Under Armour may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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.

Pair Trading with Under Armour and Capri Holdings

The main advantage of trading using opposite Under Armour and Capri Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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 Under Armour and Capri Holdings Limited 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.