Correlation Between Lululemon Athletica and Mitsubishi UFJ
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Mitsubishi UFJ 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 Mitsubishi UFJ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Mitsubishi UFJ Lease, you can compare the effects of market volatilities on Lululemon Athletica and Mitsubishi UFJ 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 Mitsubishi UFJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Mitsubishi UFJ.
Diversification Opportunities for Lululemon Athletica and Mitsubishi UFJ
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lululemon and Mitsubishi is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Mitsubishi UFJ Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Lease 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 Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Lease has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Mitsubishi UFJ go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Mitsubishi UFJ
Given the investment horizon of 90 days Lululemon Athletica is expected to under-perform the Mitsubishi UFJ. But the stock apears to be less risky and, when comparing its historical volatility, Lululemon Athletica is 2.12 times less risky than Mitsubishi UFJ. The stock trades about -0.01 of its potential returns per unit of risk. The Mitsubishi UFJ Lease is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 848.00 in Mitsubishi UFJ Lease on August 26, 2024 and sell it today you would earn a total of 362.00 from holding Mitsubishi UFJ Lease or generate 42.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 65.59% |
| Values | Daily Returns |
Lululemon Athletica vs. Mitsubishi UFJ Lease
Performance |
| Timeline |
| Lululemon Athletica |
| Mitsubishi UFJ Lease |
Lululemon Athletica and Mitsubishi UFJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Mitsubishi UFJ
The main advantage of trading using opposite Lululemon Athletica and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Mitsubishi UFJ 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 Mitsubishi UFJ will offset losses from the drop in Mitsubishi UFJ's long position.| Lululemon Athletica vs. American Eagle Outfitters | Lululemon Athletica vs. Abercrombie Fitch | Lululemon Athletica vs. Urban Outfitters | Lululemon Athletica vs. Foot Locker |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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