Correlation Between Lululemon Athletica and BAIYU Holdings
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and BAIYU Holdings 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 BAIYU Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and BAIYU Holdings, you can compare the effects of market volatilities on Lululemon Athletica and BAIYU Holdings 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 BAIYU Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and BAIYU Holdings.
Diversification Opportunities for Lululemon Athletica and BAIYU Holdings
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lululemon and BAIYU is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and BAIYU Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAIYU Holdings 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 BAIYU Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAIYU Holdings has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and BAIYU Holdings go up and down completely randomly.
Pair Corralation between Lululemon Athletica and BAIYU Holdings
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 0.26 times more return on investment than BAIYU Holdings. However, Lululemon Athletica is 3.85 times less risky than BAIYU Holdings. It trades about 0.03 of its potential returns per unit of risk. BAIYU Holdings is currently generating about -0.08 per unit of risk. If you would invest 31,504 in Lululemon Athletica on September 14, 2024 and sell it today you would earn a total of 7,429 from holding Lululemon Athletica or generate 23.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.17% |
| Values | Daily Returns |
Lululemon Athletica vs. BAIYU Holdings
Performance |
| Timeline |
| Lululemon Athletica |
| BAIYU Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lululemon Athletica and BAIYU Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and BAIYU Holdings
The main advantage of trading using opposite Lululemon Athletica and BAIYU Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, BAIYU Holdings 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 BAIYU Holdings will offset losses from the drop in BAIYU Holdings' long position.| Lululemon Athletica vs. Digital Brands Group | Lululemon Athletica vs. Data Storage | Lululemon Athletica vs. Auddia Inc | Lululemon Athletica vs. DatChat Series A |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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