Correlation Between Lululemon Athletica and Aquagold International
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Aquagold International 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 Aquagold International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Aquagold International, you can compare the effects of market volatilities on Lululemon Athletica and Aquagold International 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 Aquagold International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Aquagold International.
Diversification Opportunities for Lululemon Athletica and Aquagold International
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lululemon and Aquagold is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International 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 Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Aquagold International go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Aquagold International
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 0.24 times more return on investment than Aquagold International. However, Lululemon Athletica is 4.17 times less risky than Aquagold International. It trades about 0.11 of its potential returns per unit of risk. Aquagold International is currently generating about -0.13 per unit of risk. If you would invest 30,953 in Lululemon Athletica on November 18, 2024 and sell it today you would earn a total of 5,715 from holding Lululemon Athletica or generate 18.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.83% |
| Values | Daily Returns |
Lululemon Athletica vs. Aquagold International
Performance |
| Timeline |
| Lululemon Athletica |
| Aquagold International |
Lululemon Athletica and Aquagold International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Aquagold International
The main advantage of trading using opposite Lululemon Athletica and Aquagold International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Aquagold International 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 Aquagold International will offset losses from the drop in Aquagold International's long position.| Lululemon Athletica vs. American Eagle Outfitters | Lululemon Athletica vs. Abercrombie Fitch | Lululemon Athletica vs. Urban Outfitters | Lululemon Athletica vs. Foot Locker |
| Aquagold International vs. PepsiCo | Aquagold International vs. Coca Cola Consolidated | Aquagold International vs. Monster Beverage Corp | Aquagold International vs. Celsius Holdings |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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