Correlation Between Alvotech and Lululemon Athletica

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

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

Diversification Opportunities for Alvotech and Lululemon Athletica

0.72

Correlation Coefficient

Alvotech  Lululemon Athletica

Poor diversification

The 3 months correlation between Alvotech and Lululemon is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica and Alvotech 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 Alvotech are associated (or correlated) with Lululemon Athletica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lululemon Athletica has no effect on the direction of Alvotech i.e., Alvotech and Lululemon Athletica go up and down completely randomly.

Pair Corralation between Alvotech and Lululemon Athletica

Given the investment horizon of 90 days Alvotech is expected to generate 1.01 times more return on investment than Lululemon Athletica. However, Alvotech is 1.01 times more volatile than Lululemon Athletica. It trades about -0.05 of its potential returns per unit of risk. Lululemon Athletica is currently generating about -0.13 per unit of risk. If you would invest  1,252  in Alvotech on December 22, 2024 and sell it today you would lose (95.00) from holding Alvotech or give up 7.59% of portfolio value over 90 days.

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

Alvotech  vs.  Lululemon Athletica

Alvotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alvotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Lululemon Athletica

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lululemon Athletica has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Alvotech and Lululemon Athletica

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

The idea behind Alvotech and Lululemon Athletica 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.