Correlation Between Lululemon Athletica and Premier Exhibitions
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Premier Exhibitions 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 Premier Exhibitions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Premier Exhibitions, you can compare the effects of market volatilities on Lululemon Athletica and Premier Exhibitions 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 Premier Exhibitions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Premier Exhibitions.
Diversification Opportunities for Lululemon Athletica and Premier Exhibitions
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lululemon and Premier is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Premier Exhibitions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Exhibitions 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 Premier Exhibitions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Exhibitions has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Premier Exhibitions go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Premier Exhibitions
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 24.3 times less return on investment than Premier Exhibitions. But when comparing it to its historical volatility, Lululemon Athletica is 9.09 times less risky than Premier Exhibitions. It trades about 0.03 of its potential returns per unit of risk. Premier Exhibitions is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Premier Exhibitions on September 14, 2024 and sell it today you would earn a total of 0.00 from holding Premier Exhibitions or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 6.07% |
| Values | Daily Returns |
Lululemon Athletica vs. Premier Exhibitions
Performance |
| Timeline |
| Lululemon Athletica |
| Premier Exhibitions |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lululemon Athletica and Premier Exhibitions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Premier Exhibitions
The main advantage of trading using opposite Lululemon Athletica and Premier Exhibitions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Premier Exhibitions 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 Premier Exhibitions will offset losses from the drop in Premier Exhibitions' long position.| Lululemon Athletica vs. Digital Brands Group | Lululemon Athletica vs. Data Storage | Lululemon Athletica vs. Auddia Inc | Lululemon Athletica vs. DatChat Series A |
| Premier Exhibitions vs. Pool Corporation | Premier Exhibitions vs. National Vision Holdings | Premier Exhibitions vs. Lululemon Athletica | Premier Exhibitions vs. Cedar Realty Trust |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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