Correlation Between Lululemon Athletica and Australian Oilseeds
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Australian Oilseeds 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 Australian Oilseeds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Australian Oilseeds Holdings, you can compare the effects of market volatilities on Lululemon Athletica and Australian Oilseeds 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 Australian Oilseeds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Australian Oilseeds.
Diversification Opportunities for Lululemon Athletica and Australian Oilseeds
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lululemon and Australian is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Australian Oilseeds Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Oilseeds 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 Australian Oilseeds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Oilseeds has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Australian Oilseeds go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Australian Oilseeds
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 36.95 times less return on investment than Australian Oilseeds. But when comparing it to its historical volatility, Lululemon Athletica is 4.61 times less risky than Australian Oilseeds. It trades about 0.01 of its potential returns per unit of risk. Australian Oilseeds Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 111.00 in Australian Oilseeds Holdings on October 20, 2024 and sell it today you would earn a total of 7.00 from holding Australian Oilseeds Holdings or generate 6.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. Australian Oilseeds Holdings
Performance |
| Timeline |
| Lululemon Athletica |
| Australian Oilseeds |
Lululemon Athletica and Australian Oilseeds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Australian Oilseeds
The main advantage of trading using opposite Lululemon Athletica and Australian Oilseeds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Australian Oilseeds 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 Australian Oilseeds will offset losses from the drop in Australian Oilseeds' long position.| Lululemon Athletica vs. American Eagle Outfitters | Lululemon Athletica vs. Abercrombie Fitch | Lululemon Athletica vs. Urban Outfitters | Lululemon Athletica vs. Foot Locker |
| Australian Oilseeds vs. Grocery Outlet Holding | Australian Oilseeds vs. Titan Machinery | Australian Oilseeds vs. National Vision Holdings | Australian Oilseeds vs. Pool Corporation |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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