Correlation Between Lululemon Athletica and SAG Holdings
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and SAG Holdings 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 SAG Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and SAG Holdings Limited, you can compare the effects of market volatilities on Lululemon Athletica and SAG Holdings 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 SAG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and SAG Holdings.
Diversification Opportunities for Lululemon Athletica and SAG Holdings
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lululemon and SAG is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and SAG Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAG Holdings Limited 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 SAG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAG Holdings Limited has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and SAG Holdings go up and down completely randomly.
Pair Corralation between Lululemon Athletica and SAG Holdings
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 0.35 times more return on investment than SAG Holdings. However, Lululemon Athletica is 2.86 times less risky than SAG Holdings. It trades about 0.12 of its potential returns per unit of risk. SAG Holdings Limited is currently generating about -0.36 per unit of risk. If you would invest 30,754 in Lululemon Athletica on August 28, 2024 and sell it today you would earn a total of 1,918 from holding Lululemon Athletica or generate 6.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. SAG Holdings Limited
Performance |
| Timeline |
| Lululemon Athletica |
| SAG Holdings Limited |
Lululemon Athletica and SAG Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and SAG Holdings
The main advantage of trading using opposite Lululemon Athletica and SAG Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, SAG Holdings 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 SAG Holdings will offset losses from the drop in SAG Holdings' long position.| Lululemon Athletica vs. VF Corporation | Lululemon Athletica vs. Levi Strauss Co | Lululemon Athletica vs. Under Armour A | Lululemon Athletica vs. Oxford Industries |
| SAG Holdings vs. Ingram Micro Holding | SAG Holdings vs. Hewlett Packard Enterprise | SAG Holdings vs. Global Partners LP | SAG Holdings vs. WESCO International |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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