The sides will meet at the Estadio Nuevo Los Cármenes on Saturday, with European champions Real a point behind La Liga leaders Barcelona after beating their rivals 3-1 last weekend.
“This may be the strongest Real Madrid side we've ever seen, technically, tactically and physically speaking,” Caparros told Marca.
“They are going from strength to strength and I think the sky's the limit for them, however well they are playing at the moment.
“Winning the longed-for 10th European Cup, 'La Décima', was vital in putting them in the position they are in now. It's brought calm to the club.”