Correlation Between Lululemon Athletica and Inter Parfums
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Inter Parfums 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 Inter Parfums into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Inter Parfums, you can compare the effects of market volatilities on Lululemon Athletica and Inter Parfums 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 Inter Parfums. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Inter Parfums.
Diversification Opportunities for Lululemon Athletica and Inter Parfums
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lululemon and Inter is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Inter Parfums in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Parfums 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 Inter Parfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Parfums has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Inter Parfums go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Inter Parfums
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 2.18 times less return on investment than Inter Parfums. In addition to that, Lululemon Athletica is 1.08 times more volatile than Inter Parfums. It trades about 0.03 of its total potential returns per unit of risk. Inter Parfums is currently generating about 0.06 per unit of volatility. If you would invest 11,970 in Inter Parfums on September 1, 2024 and sell it today you would earn a total of 1,796 from holding Inter Parfums or generate 15.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. Inter Parfums
Performance |
| Timeline |
| Lululemon Athletica |
| Inter Parfums |
Lululemon Athletica and Inter Parfums Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Inter Parfums
The main advantage of trading using opposite Lululemon Athletica and Inter Parfums positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Inter Parfums 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 Inter Parfums will offset losses from the drop in Inter Parfums' long position.| Lululemon Athletica vs. VF Corporation | Lululemon Athletica vs. Levi Strauss Co | Lululemon Athletica vs. Columbia Sportswear | Lululemon Athletica vs. Oxford Industries |
| Inter Parfums vs. Seneca Foods Corp | Inter Parfums vs. Central Garden Pet | Inter Parfums vs. Central Garden Pet | Inter Parfums vs. Lifeway Foods |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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