Correlation Between Lululemon Athletica and Microbot Medical
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Microbot Medical 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 Microbot Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Microbot Medical, you can compare the effects of market volatilities on Lululemon Athletica and Microbot Medical 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 Microbot Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Microbot Medical.
Diversification Opportunities for Lululemon Athletica and Microbot Medical
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lululemon and Microbot is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical 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 Microbot Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microbot Medical has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Microbot Medical go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Microbot Medical
Given the investment horizon of 90 days Lululemon Athletica is expected to under-perform the Microbot Medical. But the stock apears to be less risky and, when comparing its historical volatility, Lululemon Athletica is 5.18 times less risky than Microbot Medical. The stock trades about -0.15 of its potential returns per unit of risk. The Microbot Medical is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 118.00 in Microbot Medical on December 29, 2024 and sell it today you would earn a total of 28.00 from holding Microbot Medical or generate 23.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lululemon Athletica vs. Microbot Medical
Performance |
Timeline |
Lululemon Athletica |
Microbot Medical |
Lululemon Athletica and Microbot Medical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lululemon Athletica and Microbot Medical
The main advantage of trading using opposite Lululemon Athletica and Microbot Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Microbot Medical 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 Microbot Medical will offset losses from the drop in Microbot Medical'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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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