Correlation Between Lululemon Athletica and Ardelyx
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Ardelyx 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 Ardelyx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Ardelyx, you can compare the effects of market volatilities on Lululemon Athletica and Ardelyx 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 Ardelyx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Ardelyx.
Diversification Opportunities for Lululemon Athletica and Ardelyx
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lululemon and Ardelyx is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Ardelyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardelyx 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 Ardelyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardelyx has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Ardelyx go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Ardelyx
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 0.4 times more return on investment than Ardelyx. However, Lululemon Athletica is 2.5 times less risky than Ardelyx. It trades about 0.09 of its potential returns per unit of risk. Ardelyx is currently generating about -0.03 per unit of risk. If you would invest 30,415 in Lululemon Athletica on August 26, 2024 and sell it today you would earn a total of 1,296 from holding Lululemon Athletica or generate 4.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. Ardelyx
Performance |
| Timeline |
| Lululemon Athletica |
| Ardelyx |
Lululemon Athletica and Ardelyx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Ardelyx
The main advantage of trading using opposite Lululemon Athletica and Ardelyx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Ardelyx 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 Ardelyx will offset losses from the drop in Ardelyx's long position.| Lululemon Athletica vs. American Eagle Outfitters | Lululemon Athletica vs. Abercrombie Fitch | Lululemon Athletica vs. Urban Outfitters | Lululemon Athletica vs. Foot Locker |
| Ardelyx vs. Eliem Therapeutics | Ardelyx vs. HCW Biologics | Ardelyx vs. Scpharmaceuticals | Ardelyx vs. Milestone Pharmaceuticals |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Stocks Directory Find actively traded stocks across global markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |