Correlation Between Lululemon Athletica and Umpqua Holdings
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Umpqua 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 Umpqua 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 Umpqua Holdings, you can compare the effects of market volatilities on Lululemon Athletica and Umpqua 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 Umpqua Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Umpqua Holdings.
Diversification Opportunities for Lululemon Athletica and Umpqua Holdings
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lululemon and Umpqua is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Umpqua Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Umpqua Holdings 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 Umpqua Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Umpqua Holdings has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Umpqua Holdings go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Umpqua Holdings
If you would invest 33,026 in Lululemon Athletica on September 15, 2024 and sell it today you would earn a total of 6,137 from holding Lululemon Athletica or generate 18.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Lululemon Athletica vs. Umpqua Holdings
Performance |
| Timeline |
| Lululemon Athletica |
| Umpqua Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lululemon Athletica and Umpqua Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Umpqua Holdings
The main advantage of trading using opposite Lululemon Athletica and Umpqua Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Umpqua 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 Umpqua Holdings will offset losses from the drop in Umpqua Holdings' long position.| Lululemon Athletica vs. American Eagle Outfitters | Lululemon Athletica vs. Abercrombie Fitch | Lululemon Athletica vs. Urban Outfitters | Lululemon Athletica vs. Foot Locker |
| Umpqua Holdings vs. Getty Realty | Umpqua Holdings vs. Lululemon Athletica | Umpqua Holdings vs. Molson Coors Brewing | Umpqua Holdings vs. Sea |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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