Correlation Between Lululemon Athletica and Kura Sushi
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Kura Sushi 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 Kura Sushi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Kura Sushi USA, you can compare the effects of market volatilities on Lululemon Athletica and Kura Sushi 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 Kura Sushi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Kura Sushi.
Diversification Opportunities for Lululemon Athletica and Kura Sushi
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lululemon and Kura is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Kura Sushi USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kura Sushi USA 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 Kura Sushi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kura Sushi USA has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Kura Sushi go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Kura Sushi
Given the investment horizon of 90 days Lululemon Athletica is expected to under-perform the Kura Sushi. But the stock apears to be less risky and, when comparing its historical volatility, Lululemon Athletica is 1.74 times less risky than Kura Sushi. The stock trades about -0.03 of its potential returns per unit of risk. The Kura Sushi USA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,929 in Kura Sushi USA on September 12, 2024 and sell it today you would earn a total of 3,388 from holding Kura Sushi USA or generate 48.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. Kura Sushi USA
Performance |
| Timeline |
| Lululemon Athletica |
| Kura Sushi USA |
Lululemon Athletica and Kura Sushi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Kura Sushi
The main advantage of trading using opposite Lululemon Athletica and Kura Sushi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Kura Sushi 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 Kura Sushi will offset losses from the drop in Kura Sushi's long position.| Lululemon Athletica vs. American Eagle Outfitters | Lululemon Athletica vs. Abercrombie Fitch | Lululemon Athletica vs. Urban Outfitters | Lululemon Athletica vs. Foot Locker |
| Kura Sushi vs. Noble Romans | Kura Sushi vs. Flanigans Enterprises | Kura Sushi vs. FAT Brands | Kura Sushi vs. El Pollo Loco |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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