Correlation Between EON Resources and Lululemon Athletica

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

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

Diversification Opportunities for EON Resources and Lululemon Athletica

0.06

Correlation Coefficient

EON Resources  Lululemon Athletica

Significant diversification

The 3 months correlation between EON and Lululemon is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding EON Resources and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica and EON Resources 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 EON Resources 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 EON Resources i.e., EON Resources and Lululemon Athletica go up and down completely randomly.

Pair Corralation between EON Resources and Lululemon Athletica

Given the investment horizon of 90 days EON Resources is expected to under-perform the Lululemon Athletica. In addition to that, EON Resources is 3.54 times more volatile than Lululemon Athletica. It trades about -0.02 of its total potential returns per unit of risk. Lululemon Athletica is currently generating about 0.07 per unit of volatility. If you would invest  33,440  in Lululemon Athletica on December 2, 2024 and sell it today you would earn a total of  3,121  from holding Lululemon Athletica or generate 9.33% return on investment over 90 days.

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

EON Resources  vs.  Lululemon Athletica

EON Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days EON Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Lululemon Athletica

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lululemon Athletica are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Lululemon Athletica may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with EON Resources and Lululemon Athletica

The main advantage of trading using opposite EON Resources and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EON Resources 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 EON Resources 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.