Correlation Between Lululemon Athletica and Spring Valley
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Spring Valley 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 Spring Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Spring Valley Acquisition, you can compare the effects of market volatilities on Lululemon Athletica and Spring Valley 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 Spring Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Spring Valley.
Diversification Opportunities for Lululemon Athletica and Spring Valley
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lululemon and Spring is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Spring Valley Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spring Valley Acquisition 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 Spring Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spring Valley Acquisition has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Spring Valley go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Spring Valley
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 153.57 times less return on investment than Spring Valley. But when comparing it to its historical volatility, Lululemon Athletica is 53.56 times less risky than Spring Valley. It trades about 0.04 of its potential returns per unit of risk. Spring Valley Acquisition is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Spring Valley Acquisition on September 5, 2024 and sell it today you would lose (7.99) from holding Spring Valley Acquisition or give up 53.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 56.0% |
| Values | Daily Returns |
Lululemon Athletica vs. Spring Valley Acquisition
Performance |
| Timeline |
| Lululemon Athletica |
| Spring Valley Acquisition |
Lululemon Athletica and Spring Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Spring Valley
The main advantage of trading using opposite Lululemon Athletica and Spring Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Spring Valley 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 Spring Valley will offset losses from the drop in Spring Valley's long position.| Lululemon Athletica vs. VF Corporation | Lululemon Athletica vs. Levi Strauss Co | Lululemon Athletica vs. Under Armour A | Lululemon Athletica vs. Columbia Sportswear |
| Spring Valley vs. 51Talk Online Education | Spring Valley vs. Asbury Automotive Group | Spring Valley vs. Lululemon Athletica | Spring Valley vs. Coupang LLC |
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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