Correlation Between Lululemon Athletica and Duluth Holdings
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica 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 Lululemon Athletica and Duluth Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Duluth Holdings, you can compare the effects of market volatilities on Lululemon Athletica 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 Lululemon Athletica with a short position of Duluth Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Duluth Holdings.
Diversification Opportunities for Lululemon Athletica and Duluth Holdings
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lululemon and Duluth is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Duluth Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duluth 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 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 Lululemon Athletica i.e., Lululemon Athletica and Duluth Holdings go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Duluth Holdings
Given the investment horizon of 90 days Lululemon Athletica is expected to under-perform the Duluth Holdings. In addition to that, Lululemon Athletica is 1.29 times more volatile than Duluth Holdings. It trades about -0.15 of its total potential returns per unit of risk. Duluth Holdings is currently generating about -0.1 per unit of volatility. If you would invest 490.00 in Duluth Holdings on January 26, 2024 and sell it today you would lose (61.00) from holding Duluth Holdings or give up 12.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. Duluth Holdings
Performance |
| Timeline |
| Lululemon Athletica |
| Duluth Holdings |
Lululemon Athletica and Duluth Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Duluth Holdings
The main advantage of trading using opposite Lululemon Athletica and Duluth Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica 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.| Lululemon Athletica vs. American Eagle Outfitters | Lululemon Athletica vs. Abercrombie Fitch | Lululemon Athletica vs. Urban Outfitters | Lululemon Athletica vs. Foot Locker |
| Duluth Holdings vs. Zumiez Inc | Duluth Holdings vs. JJill Inc | Duluth Holdings vs. Shoe Carnival | Duluth Holdings vs. Cato Corporation |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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