Correlation Between Lululemon Athletica and G III
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and G III 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 G III into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and G III Apparel Group, you can compare the effects of market volatilities on Lululemon Athletica and G III 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 G III. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and G III.
Diversification Opportunities for Lululemon Athletica and G III
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lululemon and GIII is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel 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 G III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and G III go up and down completely randomly.
Pair Corralation between Lululemon Athletica and G III
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 1.27 times more return on investment than G III. However, Lululemon Athletica is 1.27 times more volatile than G III Apparel Group. It trades about 0.28 of its potential returns per unit of risk. G III Apparel Group is currently generating about 0.2 per unit of risk. If you would invest 32,090 in Lululemon Athletica on September 13, 2024 and sell it today you would earn a total of 7,885 from holding Lululemon Athletica or generate 24.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. G III Apparel Group
Performance |
| Timeline |
| Lululemon Athletica |
| G III Apparel |
Lululemon Athletica and G III Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and G III
The main advantage of trading using opposite Lululemon Athletica and G III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, G III 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 G III will offset losses from the drop in G III's long position.| Lululemon Athletica vs. Digital Brands Group | Lululemon Athletica vs. Data Storage | Lululemon Athletica vs. Auddia Inc | Lululemon Athletica vs. DatChat Series A |
| G III vs. Oxford Industries | G III vs. Ermenegildo Zegna NV | G III vs. Kontoor Brands | G III vs. Columbia Sportswear |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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