Correlation Between Lululemon Athletica and JJill
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and JJill 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 JJill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and JJill Inc, you can compare the effects of market volatilities on Lululemon Athletica and JJill 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 JJill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and JJill.
Diversification Opportunities for Lululemon Athletica and JJill
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lululemon and JJill is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and JJill Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJill Inc 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 JJill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJill Inc has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and JJill go up and down completely randomly.
Pair Corralation between Lululemon Athletica and JJill
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 2.18 times less return on investment than JJill. In addition to that, Lululemon Athletica is 1.03 times more volatile than JJill Inc. It trades about 0.07 of its total potential returns per unit of risk. JJill Inc is currently generating about 0.17 per unit of volatility. If you would invest 2,495 in JJill Inc on August 29, 2024 and sell it today you would earn a total of 227.00 from holding JJill Inc or generate 9.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. JJill Inc
Performance |
| Timeline |
| Lululemon Athletica |
| JJill Inc |
Lululemon Athletica and JJill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and JJill
The main advantage of trading using opposite Lululemon Athletica and JJill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, JJill 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 JJill will offset losses from the drop in JJill's long position.| Lululemon Athletica vs. American Eagle Outfitters | Lululemon Athletica vs. Abercrombie Fitch | Lululemon Athletica vs. Urban Outfitters | Lululemon Athletica vs. Foot Locker |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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