Correlation Between Granite Construction and Lululemon Athletica
Can any of the company-specific risk be diversified away by investing in both Granite Construction 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 Granite Construction and Lululemon Athletica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and Lululemon Athletica, you can compare the effects of market volatilities on Granite Construction 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 Granite Construction with a short position of Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Lululemon Athletica.
Diversification Opportunities for Granite Construction and Lululemon Athletica
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Granite and Lululemon is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica and Granite Construction 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 Granite Construction 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 Granite Construction i.e., Granite Construction and Lululemon Athletica go up and down completely randomly.
Pair Corralation between Granite Construction and Lululemon Athletica
Assuming the 90 days trading horizon Granite Construction is expected to generate 0.9 times more return on investment than Lululemon Athletica. However, Granite Construction is 1.11 times less risky than Lululemon Athletica. It trades about 0.09 of its potential returns per unit of risk. Lululemon Athletica is currently generating about 0.04 per unit of risk. If you would invest 3,757 in Granite Construction on November 5, 2024 and sell it today you would earn a total of 4,693 from holding Granite Construction or generate 124.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Construction vs. Lululemon Athletica
Performance |
| Timeline |
| Granite Construction |
| Lululemon Athletica |
Granite Construction and Lululemon Athletica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Lululemon Athletica
The main advantage of trading using opposite Granite Construction and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction 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.| Granite Construction vs. PLAYMATES TOYS | Granite Construction vs. Media and Games | Granite Construction vs. SIEM OFFSHORE NEW | Granite Construction vs. British American Tobacco |
| Lululemon Athletica vs. FUYO GENERAL LEASE | Lululemon Athletica vs. ALBIS LEASING AG | Lululemon Athletica vs. PRECISION DRILLING P | Lululemon Athletica vs. CARDINAL HEALTH |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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