Correlation Between GPS Old and Lululemon Athletica

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

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

Diversification Opportunities for GPS Old and Lululemon Athletica

0.0

Correlation Coefficient

GPS Old  Lululemon Athletica

Pay attention - limited upside

The 3 months correlation between GPS and Lululemon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GPS Old and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica and GPS Old 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 GPS Old 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 GPS Old i.e., GPS Old and Lululemon Athletica go up and down completely randomly.

Pair Corralation between GPS Old and Lululemon Athletica

If you would invest (100.00) in GPS Old on December 29, 2024 and sell it today you would earn a total of  100.00  from holding GPS Old or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

GPS Old  vs.  Lululemon Athletica

GPS Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days GPS Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GPS Old is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private 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 GPS Old and Lululemon Athletica

The main advantage of trading using opposite GPS Old and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GPS Old 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 GPS Old 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.