Correlation Between Associates First and Lululemon Athletica
Can any of the company-specific risk be diversified away by investing in both Associates First 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 Associates First and Lululemon Athletica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associates First Capital and Lululemon Athletica, you can compare the effects of market volatilities on Associates First 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 Associates First with a short position of Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associates First and Lululemon Athletica.
Diversification Opportunities for Associates First and Lululemon Athletica
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Associates and Lululemon is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Associates First Capital and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica and Associates First 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 Associates First Capital 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 Associates First i.e., Associates First and Lululemon Athletica go up and down completely randomly.
Pair Corralation between Associates First and Lululemon Athletica
If you would invest 29,790 in Lululemon Athletica on September 1, 2024 and sell it today you would earn a total of 2,276 from holding Lululemon Athletica or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associates First Capital vs. Lululemon Athletica
Performance |
| Timeline |
| Associates First Capital |
| Lululemon Athletica |
Associates First and Lululemon Athletica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associates First and Lululemon Athletica
The main advantage of trading using opposite Associates First and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associates First 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.| Associates First vs. Lululemon Athletica | Associates First vs. National Vision Holdings | Associates First vs. Constellation Brands Class | Associates First vs. Ambev SA ADR |
| Lululemon Athletica vs. VF Corporation | Lululemon Athletica vs. Levi Strauss Co | Lululemon Athletica vs. Columbia Sportswear | Lululemon Athletica vs. Oxford Industries |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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