Correlation Between Lululemon Athletica and American Eagle
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and American Eagle 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 American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and American Eagle Outfitters, you can compare the effects of market volatilities on Lululemon Athletica and American Eagle 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 American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and American Eagle.
Diversification Opportunities for Lululemon Athletica and American Eagle
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lululemon and American is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and American Eagle Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Outfitters 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 American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Outfitters has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and American Eagle go up and down completely randomly.
Pair Corralation between Lululemon Athletica and American Eagle
Given the investment horizon of 90 days Lululemon Athletica is expected to under-perform the American Eagle. In addition to that, Lululemon Athletica is 1.31 times more volatile than American Eagle Outfitters. It trades about -0.15 of its total potential returns per unit of risk. American Eagle Outfitters is currently generating about 0.11 per unit of volatility. If you would invest 1,997 in American Eagle Outfitters on January 24, 2024 and sell it today you would earn a total of 255.00 from holding American Eagle Outfitters or generate 12.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. American Eagle Outfitters
Performance |
| Timeline |
| Lululemon Athletica |
| American Eagle Outfitters |
Lululemon Athletica and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and American Eagle
The main advantage of trading using opposite Lululemon Athletica and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, American Eagle 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 American Eagle will offset losses from the drop in American Eagle's long position.| Lululemon Athletica vs. Signet Jewelers | Lululemon Athletica vs. TheRealReal | Lululemon Athletica vs. Envela Corp |
| American Eagle vs. Urban Outfitters | American Eagle vs. Gap Inc | American Eagle vs. Foot Locker | American Eagle vs. Childrens Place |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Stocks Directory Find actively traded stocks across global markets | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |