Correlation Between Lululemon Athletica and NexteGO NV
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and NexteGO NV 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 NexteGO NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and NexteGO NV Ordinary, you can compare the effects of market volatilities on Lululemon Athletica and NexteGO NV 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 NexteGO NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and NexteGO NV.
Diversification Opportunities for Lululemon Athletica and NexteGO NV
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lululemon and NexteGO is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and NexteGO NV Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexteGO NV Ordinary 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 NexteGO NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexteGO NV Ordinary has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and NexteGO NV go up and down completely randomly.
Pair Corralation between Lululemon Athletica and NexteGO NV
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 0.09 times more return on investment than NexteGO NV. However, Lululemon Athletica is 10.7 times less risky than NexteGO NV. It trades about 0.15 of its potential returns per unit of risk. NexteGO NV Ordinary is currently generating about -0.32 per unit of risk. If you would invest 29,790 in Lululemon Athletica on September 1, 2024 and sell it today you would earn a total of 2,276 from holding Lululemon Athletica or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Lululemon Athletica vs. NexteGO NV Ordinary
Performance |
| Timeline |
| Lululemon Athletica |
| NexteGO NV Ordinary |
Lululemon Athletica and NexteGO NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and NexteGO NV
The main advantage of trading using opposite Lululemon Athletica and NexteGO NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, NexteGO NV 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 NexteGO NV will offset losses from the drop in NexteGO NV's long position.| Lululemon Athletica vs. VF Corporation | Lululemon Athletica vs. Levi Strauss Co | Lululemon Athletica vs. Columbia Sportswear | Lululemon Athletica vs. Oxford Industries |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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