Correlation Between Lululemon Athletica and MICROSOFT

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

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

Diversification Opportunities for Lululemon Athletica and MICROSOFT

0.0

Correlation Coefficient

Lululemon Athletica  MICROSOFT

Pay attention - limited upside

The 3 months correlation between Lululemon and MICROSOFT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and MICROSOFT PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MICROSOFT PORATION 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 MICROSOFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MICROSOFT PORATION has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and MICROSOFT go up and down completely randomly.

Pair Corralation between Lululemon Athletica and MICROSOFT

If you would invest  0.00  in MICROSOFT PORATION on December 31, 2024 and sell it today you would earn a total of  0.00  from holding MICROSOFT PORATION or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

Lululemon Athletica  vs.  MICROSOFT PORATION

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 May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

MICROSOFT PORATION

Risk-Adjusted Performance

Very Weak

Over the last 90 days MICROSOFT PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MICROSOFT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lululemon Athletica and MICROSOFT

The main advantage of trading using opposite Lululemon Athletica and MICROSOFT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, MICROSOFT 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 MICROSOFT will offset losses from the drop in MICROSOFT's long position.

The idea behind Lululemon Athletica and MICROSOFT PORATION 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.