Correlation Between Lululemon Athletica and Buckle
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Buckle 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 Buckle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Buckle Inc, you can compare the effects of market volatilities on Lululemon Athletica and Buckle 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 Buckle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Buckle.
Diversification Opportunities for Lululemon Athletica and Buckle
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lululemon and Buckle is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Buckle Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buckle Inc 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 Buckle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buckle Inc has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Buckle go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Buckle
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 3.27 times less return on investment than Buckle. In addition to that, Lululemon Athletica is 1.11 times more volatile than Buckle Inc. It trades about 0.03 of its total potential returns per unit of risk. Buckle Inc is currently generating about 0.12 per unit of volatility. If you would invest 3,561 in Buckle Inc on August 24, 2024 and sell it today you would earn a total of 1,204 from holding Buckle Inc or generate 33.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. Buckle Inc
Performance |
| Timeline |
| Lululemon Athletica |
| Buckle Inc |
Lululemon Athletica and Buckle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Buckle
The main advantage of trading using opposite Lululemon Athletica and Buckle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Buckle 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 Buckle will offset losses from the drop in Buckle's long position.| Lululemon Athletica vs. American Eagle Outfitters | Lululemon Athletica vs. Abercrombie Fitch | Lululemon Athletica vs. Urban Outfitters | Lululemon Athletica vs. Foot Locker |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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