Correlation Between Lululemon Athletica and ALK Abell
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and ALK Abell 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 ALK Abell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and ALK Abell AS, you can compare the effects of market volatilities on Lululemon Athletica and ALK Abell 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 ALK Abell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and ALK Abell.
Diversification Opportunities for Lululemon Athletica and ALK Abell
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lululemon and ALK is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and ALK Abell AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALK Abell AS 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 ALK Abell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALK Abell AS has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and ALK Abell go up and down completely randomly.
Pair Corralation between Lululemon Athletica and ALK Abell
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 1.78 times more return on investment than ALK Abell. However, Lululemon Athletica is 1.78 times more volatile than ALK Abell AS. It trades about 0.19 of its potential returns per unit of risk. ALK Abell AS is currently generating about -0.25 per unit of risk. If you would invest 28,676 in Lululemon Athletica on October 14, 2024 and sell it today you would earn a total of 10,871 from holding Lululemon Athletica or generate 37.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.88% |
| Values | Daily Returns |
Lululemon Athletica vs. ALK Abell AS
Performance |
| Timeline |
| Lululemon Athletica |
| ALK Abell AS |
Lululemon Athletica and ALK Abell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and ALK Abell
The main advantage of trading using opposite Lululemon Athletica and ALK Abell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, ALK Abell 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 ALK Abell will offset losses from the drop in ALK Abell's long position.| Lululemon Athletica vs. American Eagle Outfitters | Lululemon Athletica vs. Abercrombie Fitch | Lululemon Athletica vs. Urban Outfitters | Lululemon Athletica vs. Foot Locker |
| ALK Abell vs. CVR Partners LP | ALK Abell vs. Chemours Co | ALK Abell vs. Sensient Technologies | ALK Abell vs. Summit Materials |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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