Correlation Between Duluth Holdings and Lulus Fashion

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

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

Diversification Opportunities for Duluth Holdings and Lulus Fashion

0.67

Correlation Coefficient

Duluth Holdings  Lulus Fashion

Poor diversification

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

Pair Corralation between Duluth Holdings and Lulus Fashion

Given the investment horizon of 90 days Duluth Holdings is expected to generate 0.39 times more return on investment than Lulus Fashion. However, Duluth Holdings is 2.59 times less risky than Lulus Fashion. It trades about -0.11 of its potential returns per unit of risk. Lulus Fashion Lounge is currently generating about -0.04 per unit of risk. If you would invest  379.00  in Duluth Holdings on September 26, 2024 and sell it today you would lose (69.00) from holding Duluth Holdings or give up 18.21% of portfolio value over 90 days.

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

Duluth Holdings  vs.  Lulus Fashion Lounge

Duluth Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duluth Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Lulus Fashion Lounge

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lulus Fashion Lounge 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Duluth Holdings and Lulus Fashion

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

The idea behind Duluth Holdings and Lulus Fashion Lounge 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.