Correlation Between Lululemon Athletica and JBG SMITH
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and JBG SMITH 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 JBG SMITH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and JBG SMITH Properties, you can compare the effects of market volatilities on Lululemon Athletica and JBG SMITH 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 JBG SMITH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and JBG SMITH.
Diversification Opportunities for Lululemon Athletica and JBG SMITH
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lululemon and JBG is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and JBG SMITH Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBG SMITH Properties 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 JBG SMITH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBG SMITH Properties has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and JBG SMITH go up and down completely randomly.
Pair Corralation between Lululemon Athletica and JBG SMITH
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 1.05 times more return on investment than JBG SMITH. However, Lululemon Athletica is 1.05 times more volatile than JBG SMITH Properties. It trades about 0.15 of its potential returns per unit of risk. JBG SMITH Properties is currently generating about 0.04 per unit of risk. If you would invest 29,790 in Lululemon Athletica on September 1, 2024 and sell it today you would earn a total of 2,276 from holding Lululemon Athletica or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. JBG SMITH Properties
Performance |
| Timeline |
| Lululemon Athletica |
| JBG SMITH Properties |
Lululemon Athletica and JBG SMITH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and JBG SMITH
The main advantage of trading using opposite Lululemon Athletica and JBG SMITH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, JBG SMITH 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 JBG SMITH will offset losses from the drop in JBG SMITH's long position.| Lululemon Athletica vs. VF Corporation | Lululemon Athletica vs. Levi Strauss Co | Lululemon Athletica vs. Columbia Sportswear | Lululemon Athletica vs. Oxford Industries |
| JBG SMITH vs. Cousins Properties Incorporated | JBG SMITH vs. Highwoods Properties | JBG SMITH vs. Douglas Emmett | JBG SMITH vs. Equity Commonwealth |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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