Correlation Between Lululemon Athletica and Hewlett Packard
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Hewlett Packard 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 Hewlett Packard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Hewlett Packard Enterprise, you can compare the effects of market volatilities on Lululemon Athletica and Hewlett Packard 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 Hewlett Packard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Hewlett Packard.
Diversification Opportunities for Lululemon Athletica and Hewlett Packard
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lululemon and Hewlett is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Hewlett Packard Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hewlett Packard Ente 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 Hewlett Packard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hewlett Packard Ente has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Hewlett Packard go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Hewlett Packard
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 1.42 times more return on investment than Hewlett Packard. However, Lululemon Athletica is 1.42 times more volatile than Hewlett Packard Enterprise. It trades about 0.24 of its potential returns per unit of risk. Hewlett Packard Enterprise is currently generating about -0.01 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 6,843 from holding Lululemon Athletica or generate 21.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. Hewlett Packard Enterprise
Performance |
| Timeline |
| Lululemon Athletica |
| Hewlett Packard Ente |
Lululemon Athletica and Hewlett Packard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Hewlett Packard
The main advantage of trading using opposite Lululemon Athletica and Hewlett Packard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Hewlett Packard 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 Hewlett Packard will offset losses from the drop in Hewlett Packard'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 |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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