Correlation Between Lululemon Athletica and Xtant Medical

Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Xtant 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 Xtant 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 Xtant Medical Holdings, you can compare the effects of market volatilities on Lululemon Athletica and Xtant 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 Xtant Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Xtant Medical.

Diversification Opportunities for Lululemon Athletica and Xtant Medical

-0.87

Correlation Coefficient

Lululemon Athletica  Xtant Medical

Pay attention - limited upside

The 3 months correlation between Lululemon and Xtant is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Xtant Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtant Medical 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 Xtant Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtant Medical Holdings has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Xtant Medical go up and down completely randomly.

Pair Corralation between Lululemon Athletica and Xtant Medical

Given the investment horizon of 90 days Lululemon Athletica is expected to generate 0.54 times more return on investment than Xtant Medical. However, Lululemon Athletica is 1.86 times less risky than Xtant Medical. It trades about -0.01 of its potential returns per unit of risk. Xtant Medical Holdings is currently generating about -0.09 per unit of risk. If you would invest  42,773  in Lululemon Athletica on September 23, 2024 and sell it today you would lose (4,831) from holding Lululemon Athletica or give up 11.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Lululemon Athletica  vs.  Xtant Medical Holdings

Lululemon Athletica

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lululemon Athletica are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Lululemon Athletica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Xtant Medical Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtant Medical Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lululemon Athletica and Xtant Medical

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

The idea behind Lululemon Athletica and Xtant Medical Holdings 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.