Correlation Between Lululemon Athletica and E Mini
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and E Mini 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 E Mini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and E Mini SP 500, you can compare the effects of market volatilities on Lululemon Athletica and E Mini 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 E Mini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and E Mini.
Diversification Opportunities for Lululemon Athletica and E Mini
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lululemon and ESUSD is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and E Mini SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Mini SP 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 E Mini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Mini SP has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and E Mini go up and down completely randomly.
Pair Corralation between Lululemon Athletica and E Mini
Given the investment horizon of 90 days Lululemon Athletica is expected to under-perform the E Mini. In addition to that, Lululemon Athletica is 2.8 times more volatile than E Mini SP 500. It trades about -0.02 of its total potential returns per unit of risk. E Mini SP 500 is currently generating about 0.12 per unit of volatility. If you would invest 450,250 in E Mini SP 500 on August 29, 2024 and sell it today you would earn a total of 151,250 from holding E Mini SP 500 or generate 33.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.5% |
| Values | Daily Returns |
Lululemon Athletica vs. E Mini SP 500
Performance |
| Timeline |
| Lululemon Athletica |
| E Mini SP |
Lululemon Athletica and E Mini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and E Mini
The main advantage of trading using opposite Lululemon Athletica and E Mini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, E Mini 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 E Mini will offset losses from the drop in E Mini's long position.| Lululemon Athletica vs. American Eagle Outfitters | Lululemon Athletica vs. Abercrombie Fitch | Lululemon Athletica vs. Urban Outfitters | Lululemon Athletica vs. Foot Locker |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |