Correlation Between Lululemon Athletica and Buyer Group
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Buyer Group 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 Lululemon Athletica and Buyer Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Buyer Group International, you can compare the effects of market volatilities on Lululemon Athletica and Buyer Group 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 Lululemon Athletica with a short position of Buyer Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Buyer Group.
Diversification Opportunities for Lululemon Athletica and Buyer Group
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lululemon and Buyer is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Buyer Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buyer Group International and Lululemon Athletica 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 Lululemon Athletica are associated (or correlated) with Buyer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buyer Group International has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Buyer Group go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Buyer Group
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 0.32 times more return on investment than Buyer Group. However, Lululemon Athletica is 3.15 times less risky than Buyer Group. It trades about 0.19 of its potential returns per unit of risk. Buyer Group International is currently generating about 0.01 per unit of risk. If you would invest 28,748 in Lululemon Athletica on October 15, 2024 and sell it today you would earn a total of 10,799 from holding Lululemon Athletica or generate 37.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Lululemon Athletica vs. Buyer Group International
Performance |
Timeline |
Lululemon Athletica |
Buyer Group International |
Lululemon Athletica and Buyer Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lululemon Athletica and Buyer Group
The main advantage of trading using opposite Lululemon Athletica and Buyer Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Buyer Group 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 Buyer Group will offset losses from the drop in Buyer Group's long position.Lululemon Athletica vs. American Eagle Outfitters | Lululemon Athletica vs. Abercrombie Fitch | Lululemon Athletica vs. Urban Outfitters | Lululemon Athletica vs. Foot Locker |
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Check out your portfolio center.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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