Correlation Between U Haul and Lululemon Athletica

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

By analyzing existing cross correlation between U Haul Holding and Lululemon Athletica, you can compare the effects of market volatilities on U Haul and Lululemon Athletica 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 U Haul with a short position of Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Haul and Lululemon Athletica.

Diversification Opportunities for U Haul and Lululemon Athletica

-0.44

Correlation Coefficient

U Haul  Lululemon Athletica

Very good diversification

The 3 months correlation between UHAL and Lululemon is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding U Haul Holding and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica and U Haul 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 U Haul Holding are associated (or correlated) with Lululemon Athletica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lululemon Athletica has no effect on the direction of U Haul i.e., U Haul and Lululemon Athletica go up and down completely randomly.

Pair Corralation between U Haul and Lululemon Athletica

Given the investment horizon of 90 days U Haul is expected to generate 2.06 times less return on investment than Lululemon Athletica. But when comparing it to its historical volatility, U Haul Holding is 1.2 times less risky than Lululemon Athletica. It trades about 0.01 of its potential returns per unit of risk. Lululemon Athletica is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  32,382  in Lululemon Athletica on October 7, 2024 and sell it today you would earn a total of  5,436  from holding Lululemon Athletica or generate 16.79% return on investment over 90 days.

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

U Haul Holding  vs.  Lululemon Athletica

U Haul Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days U Haul Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Lululemon Athletica

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lululemon Athletica are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Lululemon Athletica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with U Haul and Lululemon Athletica

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

The idea behind U Haul Holding and Lululemon Athletica 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 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.