Correlation Between Lululemon Athletica and SHF Holdings
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and SHF Holdings 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 SHF Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and SHF Holdings, you can compare the effects of market volatilities on Lululemon Athletica and SHF Holdings 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 SHF Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and SHF Holdings.
Diversification Opportunities for Lululemon Athletica and SHF Holdings
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lululemon and SHF is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and SHF Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHF Holdings 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 SHF Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHF Holdings has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and SHF Holdings go up and down completely randomly.
Pair Corralation between Lululemon Athletica and SHF Holdings
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 9.62 times less return on investment than SHF Holdings. But when comparing it to its historical volatility, Lululemon Athletica is 4.46 times less risky than SHF Holdings. It trades about 0.02 of its potential returns per unit of risk. SHF Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2.97 in SHF Holdings on December 4, 2024 and sell it today you would lose (0.17) from holding SHF Holdings or give up 5.72% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 77.97% |
Values | Daily Returns |
Lululemon Athletica vs. SHF Holdings
Performance |
Timeline |
Lululemon Athletica |
SHF Holdings |
Lululemon Athletica and SHF Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lululemon Athletica and SHF Holdings
The main advantage of trading using opposite Lululemon Athletica and SHF Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, SHF Holdings 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 SHF Holdings will offset losses from the drop in SHF Holdings' 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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