Correlation Between ConvaTec Group and Lululemon Athletica
Can any of the company-specific risk be diversified away by investing in both ConvaTec Group 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 ConvaTec Group and Lululemon Athletica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConvaTec Group Plc and Lululemon Athletica, you can compare the effects of market volatilities on ConvaTec Group 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 ConvaTec Group with a short position of Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConvaTec Group and Lululemon Athletica.
Diversification Opportunities for ConvaTec Group and Lululemon Athletica
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ConvaTec and Lululemon is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding ConvaTec Group Plc and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica and ConvaTec Group 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 ConvaTec Group Plc 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 ConvaTec Group i.e., ConvaTec Group and Lululemon Athletica go up and down completely randomly.
Pair Corralation between ConvaTec Group and Lululemon Athletica
Assuming the 90 days horizon ConvaTec Group is expected to generate 1.46 times less return on investment than Lululemon Athletica. In addition to that, ConvaTec Group is 1.78 times more volatile than Lululemon Athletica. It trades about 0.1 of its total potential returns per unit of risk. Lululemon Athletica is currently generating about 0.26 per unit of volatility. If you would invest 32,090 in Lululemon Athletica on September 13, 2024 and sell it today you would earn a total of 7,226 from holding Lululemon Athletica or generate 22.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ConvaTec Group Plc vs. Lululemon Athletica
Performance |
| Timeline |
| ConvaTec Group Plc |
| Lululemon Athletica |
ConvaTec Group and Lululemon Athletica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ConvaTec Group and Lululemon Athletica
The main advantage of trading using opposite ConvaTec Group and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConvaTec Group 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.| ConvaTec Group vs. GlucoTrack | ConvaTec Group vs. Sharps Technology | ConvaTec Group vs. Utah Medical Products | ConvaTec Group vs. Innovative Eyewear |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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