Correlation Between Lulus Fashion and Brilliant Earth
Can any of the company-specific risk be diversified away by investing in both Lulus Fashion and Brilliant Earth 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 Brilliant Earth 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 Brilliant Earth Group, you can compare the effects of market volatilities on Lulus Fashion and Brilliant Earth 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 Brilliant Earth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lulus Fashion and Brilliant Earth.
Diversification Opportunities for Lulus Fashion and Brilliant Earth
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lulus and Brilliant is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Lulus Fashion Lounge and Brilliant Earth Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brilliant Earth Group 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 Brilliant Earth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brilliant Earth Group has no effect on the direction of Lulus Fashion i.e., Lulus Fashion and Brilliant Earth go up and down completely randomly.
Pair Corralation between Lulus Fashion and Brilliant Earth
Given the investment horizon of 90 days Lulus Fashion Lounge is expected to under-perform the Brilliant Earth. In addition to that, Lulus Fashion is 2.17 times more volatile than Brilliant Earth Group. It trades about -0.06 of its total potential returns per unit of risk. Brilliant Earth Group is currently generating about 0.06 per unit of volatility. If you would invest 167.00 in Brilliant Earth Group on August 28, 2024 and sell it today you would earn a total of 6.00 from holding Brilliant Earth Group or generate 3.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lulus Fashion Lounge vs. Brilliant Earth Group
Performance |
| Timeline |
| Lulus Fashion Lounge |
| Brilliant Earth Group |
Lulus Fashion and Brilliant Earth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lulus Fashion and Brilliant Earth
The main advantage of trading using opposite Lulus Fashion and Brilliant Earth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lulus Fashion position performs unexpectedly, Brilliant Earth 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 Brilliant Earth will offset losses from the drop in Brilliant Earth's long position.| Lulus Fashion vs. Citi Trends | Lulus Fashion vs. Tillys Inc | Lulus Fashion vs. Zumiez Inc | Lulus Fashion vs. JJill Inc |
| Brilliant Earth vs. Capri Holdings | Brilliant Earth vs. Movado Group | Brilliant Earth vs. Tapestry | Brilliant Earth vs. TheRealReal |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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