Correlation Between Lululemon Athletica and Enersys
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Enersys 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 Enersys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Enersys, you can compare the effects of market volatilities on Lululemon Athletica and Enersys 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 Enersys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Enersys.
Diversification Opportunities for Lululemon Athletica and Enersys
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lululemon and Enersys is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys 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 Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Enersys go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Enersys
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 1.35 times more return on investment than Enersys. However, Lululemon Athletica is 1.35 times more volatile than Enersys. It trades about 0.18 of its potential returns per unit of risk. Enersys is currently generating about 0.01 per unit of risk. If you would invest 25,883 in Lululemon Athletica on August 28, 2024 and sell it today you would earn a total of 6,789 from holding Lululemon Athletica or generate 26.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. Enersys
Performance |
| Timeline |
| Lululemon Athletica |
| Enersys |
Lululemon Athletica and Enersys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Enersys
The main advantage of trading using opposite Lululemon Athletica and Enersys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Enersys 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 Enersys will offset losses from the drop in Enersys' long position.| Lululemon Athletica vs. VF Corporation | Lululemon Athletica vs. Levi Strauss Co | Lululemon Athletica vs. Under Armour A | Lululemon Athletica vs. Oxford Industries |
| Enersys vs. Bloom Energy Corp | Enersys vs. Eos Energy Enterprises | Enersys vs. Sunrise New Energy | Enersys vs. GrafTech International |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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