Correlation Between Lulus Fashion and American Eagle
Can any of the company-specific risk be diversified away by investing in both Lulus Fashion and American Eagle 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 Lulus Fashion and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lulus Fashion Lounge and American Eagle Outfitters, you can compare the effects of market volatilities on Lulus Fashion and American Eagle 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 Lulus Fashion with a short position of American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lulus Fashion and American Eagle.
Diversification Opportunities for Lulus Fashion and American Eagle
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lulus and American is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lulus Fashion Lounge and American Eagle Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Outfitters and Lulus Fashion 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 Lulus Fashion Lounge are associated (or correlated) with American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Outfitters has no effect on the direction of Lulus Fashion i.e., Lulus Fashion and American Eagle go up and down completely randomly.
Pair Corralation between Lulus Fashion and American Eagle
Given the investment horizon of 90 days Lulus Fashion Lounge is expected to generate 3.05 times more return on investment than American Eagle. However, Lulus Fashion is 3.05 times more volatile than American Eagle Outfitters. It trades about 0.02 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.09 per unit of risk. If you would invest 130.00 in Lulus Fashion Lounge on August 28, 2024 and sell it today you would lose (4.00) from holding Lulus Fashion Lounge or give up 3.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lulus Fashion Lounge vs. American Eagle Outfitters
Performance |
| Timeline |
| Lulus Fashion Lounge |
| American Eagle Outfitters |
Lulus Fashion and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lulus Fashion and American Eagle
The main advantage of trading using opposite Lulus Fashion and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lulus Fashion position performs unexpectedly, American Eagle 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 American Eagle will offset losses from the drop in American Eagle's long position.| Lulus Fashion vs. Citi Trends | Lulus Fashion vs. Tillys Inc | Lulus Fashion vs. Zumiez Inc | Lulus Fashion vs. JJill Inc |
| American Eagle vs. Urban Outfitters | American Eagle vs. Foot Locker | American Eagle vs. Childrens Place | American Eagle vs. Abercrombie Fitch |
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
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |