Correlation Between Lululemon Athletica and Croghan Bancshares
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Croghan Bancshares 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 Croghan Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Croghan Bancshares, you can compare the effects of market volatilities on Lululemon Athletica and Croghan Bancshares 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 Croghan Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Croghan Bancshares.
Diversification Opportunities for Lululemon Athletica and Croghan Bancshares
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lululemon and Croghan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Croghan Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Croghan Bancshares 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 Croghan Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Croghan Bancshares has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Croghan Bancshares go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Croghan Bancshares
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 0.67 times more return on investment than Croghan Bancshares. However, Lululemon Athletica is 1.49 times less risky than Croghan Bancshares. It trades about 0.03 of its potential returns per unit of risk. Croghan Bancshares is currently generating about 0.01 per unit of risk. If you would invest 31,154 in Lululemon Athletica on September 13, 2024 and sell it today you would earn a total of 8,162 from holding Lululemon Athletica or generate 26.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 84.24% |
| Values | Daily Returns |
Lululemon Athletica vs. Croghan Bancshares
Performance |
| Timeline |
| Lululemon Athletica |
| Croghan Bancshares |
Lululemon Athletica and Croghan Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Croghan Bancshares
The main advantage of trading using opposite Lululemon Athletica and Croghan Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Croghan Bancshares 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 Croghan Bancshares will offset losses from the drop in Croghan Bancshares' 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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