Correlation Between PARKEN Sport and Lululemon Athletica
Can any of the company-specific risk be diversified away by investing in both PARKEN Sport 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 PARKEN Sport and Lululemon Athletica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PARKEN Sport Entertainment and Lululemon Athletica, you can compare the effects of market volatilities on PARKEN Sport 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 PARKEN Sport with a short position of Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARKEN Sport and Lululemon Athletica.
Diversification Opportunities for PARKEN Sport and Lululemon Athletica
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PARKEN and Lululemon is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding PARKEN Sport Entertainment and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica and PARKEN Sport 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 PARKEN Sport Entertainment 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 PARKEN Sport i.e., PARKEN Sport and Lululemon Athletica go up and down completely randomly.
Pair Corralation between PARKEN Sport and Lululemon Athletica
Assuming the 90 days horizon PARKEN Sport Entertainment is expected to generate 2.63 times more return on investment than Lululemon Athletica. However, PARKEN Sport is 2.63 times more volatile than Lululemon Athletica. It trades about 0.06 of its potential returns per unit of risk. Lululemon Athletica is currently generating about 0.04 per unit of risk. If you would invest 437.00 in PARKEN Sport Entertainment on October 11, 2024 and sell it today you would earn a total of 1,328 from holding PARKEN Sport Entertainment or generate 303.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PARKEN Sport Entertainment vs. Lululemon Athletica
Performance |
| Timeline |
| PARKEN Sport Enterta |
| Lululemon Athletica |
PARKEN Sport and Lululemon Athletica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PARKEN Sport and Lululemon Athletica
The main advantage of trading using opposite PARKEN Sport and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PARKEN Sport 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.| PARKEN Sport vs. Laureate Education | PARKEN Sport vs. Adtalem Global Education | PARKEN Sport vs. YATRA ONLINE DL 0001 | PARKEN Sport vs. Gruppo Mutuionline SpA |
| Lululemon Athletica vs. NH HOTEL GROUP | Lululemon Athletica vs. Xenia Hotels Resorts | Lululemon Athletica vs. Dalata Hotel Group | Lululemon Athletica vs. DALATA HOTEL |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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