Correlation Between Lululemon Athletica and GoHealth
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and GoHealth 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 GoHealth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and GoHealth, you can compare the effects of market volatilities on Lululemon Athletica and GoHealth 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 GoHealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and GoHealth.
Diversification Opportunities for Lululemon Athletica and GoHealth
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lululemon and GoHealth is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and GoHealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoHealth 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 GoHealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoHealth has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and GoHealth go up and down completely randomly.
Pair Corralation between Lululemon Athletica and GoHealth
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 1.15 times less return on investment than GoHealth. But when comparing it to its historical volatility, Lululemon Athletica is 1.72 times less risky than GoHealth. It trades about 0.09 of its potential returns per unit of risk. GoHealth is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,184 in GoHealth on August 30, 2024 and sell it today you would earn a total of 50.00 from holding GoHealth or generate 4.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. GoHealth
Performance |
| Timeline |
| Lululemon Athletica |
| GoHealth |
Lululemon Athletica and GoHealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and GoHealth
The main advantage of trading using opposite Lululemon Athletica and GoHealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, GoHealth 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 GoHealth will offset losses from the drop in GoHealth's long position.| Lululemon Athletica vs. American Eagle Outfitters | Lululemon Athletica vs. Abercrombie Fitch | Lululemon Athletica vs. Urban Outfitters | Lululemon Athletica vs. Foot Locker |
| GoHealth vs. eHealth | GoHealth vs. Tian Ruixiang Holdings | GoHealth vs. Huize Holding | GoHealth vs. Selectquote |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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