Correlation Between Lululemon Athletica and Scilex Holding
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Scilex Holding 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 Scilex Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Scilex Holding, you can compare the effects of market volatilities on Lululemon Athletica and Scilex Holding 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 Scilex Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Scilex Holding.
Diversification Opportunities for Lululemon Athletica and Scilex Holding
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lululemon and Scilex is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Scilex Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scilex Holding 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 Scilex Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scilex Holding has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Scilex Holding go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Scilex Holding
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 8.44 times less return on investment than Scilex Holding. But when comparing it to its historical volatility, Lululemon Athletica is 9.75 times less risky than Scilex Holding. It trades about 0.12 of its potential returns per unit of risk. Scilex Holding is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Scilex Holding on August 28, 2024 and sell it today you would lose (1.00) from holding Scilex Holding or give up 3.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. Scilex Holding
Performance |
| Timeline |
| Lululemon Athletica |
| Scilex Holding |
Lululemon Athletica and Scilex Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Scilex Holding
The main advantage of trading using opposite Lululemon Athletica and Scilex Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Scilex Holding 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 Scilex Holding will offset losses from the drop in Scilex Holding's long position.| Lululemon Athletica vs. VF Corporation | Lululemon Athletica vs. Levi Strauss Co | Lululemon Athletica vs. Under Armour A | Lululemon Athletica vs. Oxford Industries |
| Scilex Holding vs. Lululemon Athletica | Scilex Holding vs. Nike Inc | Scilex Holding vs. JD Sports Fashion | Scilex Holding vs. Apogee Enterprises |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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