Correlation Between Lulus Fashion and Duluth Holdings

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

By analyzing existing cross correlation between Lulus Fashion Lounge and Duluth Holdings, you can compare the effects of market volatilities on Lulus Fashion and Duluth 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 Lulus Fashion with a short position of Duluth Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lulus Fashion and Duluth Holdings.

Diversification Opportunities for Lulus Fashion and Duluth Holdings

0.67

Correlation Coefficient

Lulus Fashion  Duluth Holdings

Poor diversification

The 3 months correlation between Lulus and Duluth is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lulus Fashion Lounge and Duluth Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duluth Holdings and Lulus Fashion 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 Lulus Fashion Lounge are associated (or correlated) with Duluth Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duluth Holdings has no effect on the direction of Lulus Fashion i.e., Lulus Fashion and Duluth Holdings go up and down completely randomly.

Pair Corralation between Lulus Fashion and Duluth Holdings

Given the investment horizon of 90 days Lulus Fashion Lounge is expected to generate 2.12 times more return on investment than Duluth Holdings. However, Lulus Fashion is 2.12 times more volatile than Duluth Holdings. It trades about 0.0 of its potential returns per unit of risk. Duluth Holdings is currently generating about -0.04 per unit of risk. If you would invest  237.00  in Lulus Fashion Lounge on September 27, 2024 and sell it today you would lose (121.00) from holding Lulus Fashion Lounge or give up 51.05% of portfolio value over 90 days.

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

Lulus Fashion Lounge  vs.  Duluth Holdings

Lulus Fashion Lounge

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lulus Fashion Lounge 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Duluth Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duluth Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Lulus Fashion and Duluth Holdings

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

The idea behind Lulus Fashion Lounge and Duluth 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.

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 Stocks Directory module to find actively traded stocks across global markets.