Correlation Between Lululemon Athletica and Callaway Golf
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Callaway Golf 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 Callaway Golf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Callaway Golf, you can compare the effects of market volatilities on Lululemon Athletica and Callaway Golf 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 Callaway Golf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Callaway Golf.
Diversification Opportunities for Lululemon Athletica and Callaway Golf
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lululemon and Callaway is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Callaway Golf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Callaway Golf 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 Callaway Golf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Callaway Golf has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Callaway Golf go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Callaway Golf
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 0.73 times more return on investment than Callaway Golf. However, Lululemon Athletica is 1.37 times less risky than Callaway Golf. It trades about 0.0 of its potential returns per unit of risk. Callaway Golf is currently generating about -0.06 per unit of risk. If you would invest 35,495 in Lululemon Athletica on August 31, 2024 and sell it today you would lose (3,429) from holding Lululemon Athletica or give up 9.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. Callaway Golf
Performance |
| Timeline |
| Lululemon Athletica |
| Callaway Golf |
Lululemon Athletica and Callaway Golf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Callaway Golf
The main advantage of trading using opposite Lululemon Athletica and Callaway Golf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Callaway Golf 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 Callaway Golf will offset losses from the drop in Callaway Golf's long position.| Lululemon Athletica vs. American Eagle Outfitters | Lululemon Athletica vs. Abercrombie Fitch | Lululemon Athletica vs. Urban Outfitters | Lululemon Athletica vs. Foot Locker |
| Callaway Golf vs. Bowlero Corp | Callaway Golf vs. Johnson Outdoors | Callaway Golf vs. YETI Holdings | Callaway Golf vs. Xponential Fitness |
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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