Correlation Between Lululemon Athletica and Vince Holding
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Vince 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 Vince 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 Vince Holding Corp, you can compare the effects of market volatilities on Lululemon Athletica and Vince 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 Vince Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Vince Holding.
Diversification Opportunities for Lululemon Athletica and Vince Holding
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lululemon and Vince is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Vince Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vince Holding Corp 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 Vince Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vince Holding Corp has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Vince Holding go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Vince Holding
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 0.34 times more return on investment than Vince Holding. However, Lululemon Athletica is 2.98 times less risky than Vince Holding. It trades about -0.01 of its potential returns per unit of risk. Vince Holding Corp is currently generating about -0.02 per unit of risk. If you would invest 38,186 in Lululemon Athletica on August 30, 2024 and sell it today you would lose (6,234) from holding Lululemon Athletica or give up 16.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.75% |
| Values | Daily Returns |
Lululemon Athletica vs. Vince Holding Corp
Performance |
| Timeline |
| Lululemon Athletica |
| Vince Holding Corp |
Lululemon Athletica and Vince Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Vince Holding
The main advantage of trading using opposite Lululemon Athletica and Vince Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Vince 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 Vince Holding will offset losses from the drop in Vince Holding's long position.| Lululemon Athletica vs. American Eagle Outfitters | Lululemon Athletica vs. Abercrombie Fitch | Lululemon Athletica vs. Urban Outfitters | Lululemon Athletica vs. Foot Locker |
| Vince Holding vs. Ermenegildo Zegna NV | Vince Holding vs. Columbia Sportswear | Vince Holding vs. Gildan Activewear | Vince Holding vs. G III Apparel Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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