Correlation Between Lululemon Athletica and Levi Strauss
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Levi Strauss 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 Levi Strauss into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Levi Strauss Co, you can compare the effects of market volatilities on Lululemon Athletica and Levi Strauss 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 Levi Strauss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Levi Strauss.
Diversification Opportunities for Lululemon Athletica and Levi Strauss
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lululemon and Levi is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Levi Strauss Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Levi Strauss 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 Levi Strauss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Levi Strauss has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Levi Strauss go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Levi Strauss
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 1.89 times more return on investment than Levi Strauss. However, Lululemon Athletica is 1.89 times more volatile than Levi Strauss Co. It trades about 0.28 of its potential returns per unit of risk. Levi Strauss Co is currently generating about 0.09 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 7,885 from holding Lululemon Athletica or generate 24.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. Levi Strauss Co
Performance |
| Timeline |
| Lululemon Athletica |
| Levi Strauss |
Lululemon Athletica and Levi Strauss Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Levi Strauss
The main advantage of trading using opposite Lululemon Athletica and Levi Strauss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Levi Strauss 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 Levi Strauss will offset losses from the drop in Levi Strauss' long position.| Lululemon Athletica vs. Digital Brands Group | Lululemon Athletica vs. Data Storage | Lululemon Athletica vs. Auddia Inc | Lululemon Athletica vs. DatChat Series A |
| Levi Strauss vs. Deckers Outdoor | Levi Strauss vs. On Holding | Levi Strauss vs. Skechers USA | Levi Strauss vs. Steven Madden |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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