Correlation Between Lulus Fashion and Abercrombie Fitch
Can any of the company-specific risk be diversified away by investing in both Lulus Fashion and Abercrombie Fitch 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 Abercrombie Fitch 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 Abercrombie Fitch, you can compare the effects of market volatilities on Lulus Fashion and Abercrombie Fitch 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 Abercrombie Fitch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lulus Fashion and Abercrombie Fitch.
Diversification Opportunities for Lulus Fashion and Abercrombie Fitch
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lulus and Abercrombie is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Lulus Fashion Lounge and Abercrombie Fitch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abercrombie Fitch 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 Abercrombie Fitch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abercrombie Fitch has no effect on the direction of Lulus Fashion i.e., Lulus Fashion and Abercrombie Fitch go up and down completely randomly.
Pair Corralation between Lulus Fashion and Abercrombie Fitch
Given the investment horizon of 90 days Lulus Fashion Lounge is expected to under-perform the Abercrombie Fitch. In addition to that, Lulus Fashion is 3.48 times more volatile than Abercrombie Fitch. It trades about -0.06 of its total potential returns per unit of risk. Abercrombie Fitch is currently generating about 0.21 per unit of volatility. If you would invest 13,792 in Abercrombie Fitch on August 28, 2024 and sell it today you would earn a total of 1,658 from holding Abercrombie Fitch or generate 12.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lulus Fashion Lounge vs. Abercrombie Fitch
Performance |
| Timeline |
| Lulus Fashion Lounge |
| Abercrombie Fitch |
Lulus Fashion and Abercrombie Fitch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lulus Fashion and Abercrombie Fitch
The main advantage of trading using opposite Lulus Fashion and Abercrombie Fitch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lulus Fashion position performs unexpectedly, Abercrombie Fitch 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 Abercrombie Fitch will offset losses from the drop in Abercrombie Fitch's long position.| Lulus Fashion vs. Citi Trends | Lulus Fashion vs. Tillys Inc | Lulus Fashion vs. Zumiez Inc | Lulus Fashion vs. JJill Inc |
| Abercrombie Fitch vs. Urban Outfitters | Abercrombie Fitch vs. Foot Locker | Abercrombie Fitch vs. Childrens Place | Abercrombie Fitch vs. American Eagle Outfitters |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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