Correlation Between Lululemon Athletica and Mind Technology
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Mind Technology 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 Mind Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Mind Technology, you can compare the effects of market volatilities on Lululemon Athletica and Mind Technology 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 Mind Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Mind Technology.
Diversification Opportunities for Lululemon Athletica and Mind Technology
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lululemon and Mind is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Mind Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mind Technology 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 Mind Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mind Technology has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Mind Technology go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Mind Technology
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 1.32 times more return on investment than Mind Technology. However, Lululemon Athletica is 1.32 times more volatile than Mind Technology. It trades about 0.18 of its potential returns per unit of risk. Mind Technology is currently generating about 0.16 per unit of risk. If you would invest 29,314 in Lululemon Athletica on August 24, 2024 and sell it today you would earn a total of 3,034 from holding Lululemon Athletica or generate 10.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lululemon Athletica vs. Mind Technology
Performance |
| Timeline |
| Lululemon Athletica |
| Mind Technology |
Lululemon Athletica and Mind Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Mind Technology
The main advantage of trading using opposite Lululemon Athletica and Mind Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Mind Technology 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 Mind Technology will offset losses from the drop in Mind Technology's long position.| Lululemon Athletica vs. American Eagle Outfitters | Lululemon Athletica vs. Abercrombie Fitch | Lululemon Athletica vs. Urban Outfitters | Lululemon Athletica vs. Foot Locker |
| Mind Technology vs. Spectris plc | Mind Technology vs. Electro Sensors | Mind Technology vs. Sono Tek Corp | Mind Technology vs. Vishay Precision Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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