Correlation Between Lululemon Athletica and L Brands
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and L Brands 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 L Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and L Brands, you can compare the effects of market volatilities on Lululemon Athletica and L Brands 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 L Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and L Brands.
Diversification Opportunities for Lululemon Athletica and L Brands
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lululemon and L Brands is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and L Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Brands 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 L Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Brands has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and L Brands go up and down completely randomly.
Pair Corralation between Lululemon Athletica and L Brands
If you would invest (100.00) in L Brands on February 13, 2024 and sell it today you would earn a total of 100.00 from holding L Brands or generate -100.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
Lululemon Athletica vs. L Brands
Performance |
Timeline |
Lululemon Athletica |
L Brands |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lululemon Athletica and L Brands Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lululemon Athletica and L Brands
The main advantage of trading using opposite Lululemon Athletica and L Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, L Brands 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 L Brands will offset losses from the drop in L Brands' long position.Lululemon Athletica vs. Citi Trends | Lululemon Athletica vs. Zumiez Inc | Lululemon Athletica vs. Tillys Inc | Lululemon Athletica vs. Duluth Holdings |
L Brands vs. Sharplink Gaming | L Brands vs. Molson Coors Brewing | L Brands vs. Empire Global Gaming | L Brands vs. Ainsworth Game Technology |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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