Correlation Between Lululemon Athletica and Under Armour
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Under Armour 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 Under Armour into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Under Armour A, you can compare the effects of market volatilities on Lululemon Athletica and Under Armour 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 Under Armour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Under Armour.
Diversification Opportunities for Lululemon Athletica and Under Armour
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lululemon and Under is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Under Armour A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Under Armour A 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 Under Armour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Under Armour A has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Under Armour go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Under Armour
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 1.95 times more return on investment than Under Armour. However, Lululemon Athletica is 1.95 times more volatile than Under Armour A. It trades about 0.28 of its potential returns per unit of risk. Under Armour A is currently generating about 0.18 per unit of risk. If you would invest 32,090 in Lululemon Athletica on September 13, 2024 and sell it today you would earn a total of 7,885 from holding Lululemon Athletica or generate 24.57% 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. Under Armour A
Performance |
| Timeline |
| Lululemon Athletica |
| Under Armour A |
Lululemon Athletica and Under Armour Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Under Armour
The main advantage of trading using opposite Lululemon Athletica and Under Armour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Under Armour 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 Under Armour will offset losses from the drop in Under Armour's long position.| Lululemon Athletica vs. Digital Brands Group | Lululemon Athletica vs. Data Storage | Lululemon Athletica vs. Auddia Inc | Lululemon Athletica vs. DatChat Series A |
| Under Armour vs. Levi Strauss Co | Under Armour vs. Hanesbrands | Under Armour vs. VF Corporation | Under Armour vs. Ralph Lauren Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |