Correlation Between Lululemon Athletica and MSP Recovery
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and MSP Recovery 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 MSP Recovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and MSP Recovery, you can compare the effects of market volatilities on Lululemon Athletica and MSP Recovery 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 MSP Recovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and MSP Recovery.
Diversification Opportunities for Lululemon Athletica and MSP Recovery
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lululemon and MSP is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and MSP Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSP Recovery 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 MSP Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSP Recovery has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and MSP Recovery go up and down completely randomly.
Pair Corralation between Lululemon Athletica and MSP Recovery
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 0.24 times more return on investment than MSP Recovery. However, Lululemon Athletica is 4.25 times less risky than MSP Recovery. It trades about 0.09 of its potential returns per unit of risk. MSP Recovery is currently generating about -0.21 per unit of risk. If you would invest 30,415 in Lululemon Athletica on August 26, 2024 and sell it today you would earn a total of 1,296 from holding Lululemon Athletica or generate 4.26% 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. MSP Recovery
Performance |
| Timeline |
| Lululemon Athletica |
| MSP Recovery |
Lululemon Athletica and MSP Recovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and MSP Recovery
The main advantage of trading using opposite Lululemon Athletica and MSP Recovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, MSP Recovery 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 MSP Recovery will offset losses from the drop in MSP Recovery's long position.| Lululemon Athletica vs. VF Corporation | Lululemon Athletica vs. Levi Strauss Co | Lululemon Athletica vs. Under Armour A | Lululemon Athletica vs. Oxford Industries |
| MSP Recovery vs. Perseus Mining Limited | MSP Recovery vs. Lululemon Athletica | MSP Recovery vs. Coupang LLC | MSP Recovery vs. Meiwu Technology Co |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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