Correlation Between Lululemon Athletica and Titan Machinery
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Titan Machinery 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 Titan Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Titan Machinery, you can compare the effects of market volatilities on Lululemon Athletica and Titan Machinery 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 Titan Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Titan Machinery.
Diversification Opportunities for Lululemon Athletica and Titan Machinery
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lululemon and Titan is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery 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 Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Titan Machinery go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Titan Machinery
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 2.17 times less return on investment than Titan Machinery. But when comparing it to its historical volatility, Lululemon Athletica is 1.48 times less risky than Titan Machinery. It trades about 0.1 of its potential returns per unit of risk. Titan Machinery is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,407 in Titan Machinery on August 31, 2024 and sell it today you would earn a total of 162.00 from holding Titan Machinery or generate 11.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lululemon Athletica vs. Titan Machinery
Performance |
| Timeline |
| Lululemon Athletica |
| Titan Machinery |
Lululemon Athletica and Titan Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Titan Machinery
The main advantage of trading using opposite Lululemon Athletica and Titan Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Titan Machinery 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 Titan Machinery will offset losses from the drop in Titan Machinery's long position.| Lululemon Athletica vs. American Eagle Outfitters | Lululemon Athletica vs. Abercrombie Fitch | Lululemon Athletica vs. Urban Outfitters | Lululemon Athletica vs. Foot Locker |
| Titan Machinery vs. DXP Enterprises | Titan Machinery vs. Watsco Inc | Titan Machinery vs. Distribution Solutions Group | Titan Machinery vs. SiteOne Landscape Supply |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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