Correlation Between Lululemon Athletica and Express
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Express 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 Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Express, you can compare the effects of market volatilities on Lululemon Athletica and Express 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 Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Express.
Diversification Opportunities for Lululemon Athletica and Express
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lululemon and Express is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Express 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 Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Express has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Express go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Express
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 0.42 times more return on investment than Express. However, Lululemon Athletica is 2.36 times less risky than Express. It trades about 0.01 of its potential returns per unit of risk. Express is currently generating about 0.0 per unit of risk. If you would invest 32,926 in Lululemon Athletica on August 28, 2024 and sell it today you would lose (254.00) from holding Lululemon Athletica or give up 0.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 28.78% |
| Values | Daily Returns |
Lululemon Athletica vs. Express
Performance |
| Timeline |
| Lululemon Athletica |
| Express |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lululemon Athletica and Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Express
The main advantage of trading using opposite Lululemon Athletica and Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Express 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 Express will offset losses from the drop in Express' long position.| Lululemon Athletica vs. VF Corporation | Lululemon Athletica vs. Levi Strauss Co | Lululemon Athletica vs. Under Armour A | Lululemon Athletica vs. Oxford Industries |
| Express vs. Koss Corporation | Express vs. BlackBerry | Express vs. Castor Maritime | Express vs. Clover Health Investments |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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