Correlation Between Lulus Fashion and Foot Locker
Can any of the company-specific risk be diversified away by investing in both Lulus Fashion and Foot Locker 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 Foot Locker 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 Foot Locker, you can compare the effects of market volatilities on Lulus Fashion and Foot Locker 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 Foot Locker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lulus Fashion and Foot Locker.
Diversification Opportunities for Lulus Fashion and Foot Locker
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lulus and Foot is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Lulus Fashion Lounge and Foot Locker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foot Locker 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 Foot Locker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foot Locker has no effect on the direction of Lulus Fashion i.e., Lulus Fashion and Foot Locker go up and down completely randomly.
Pair Corralation between Lulus Fashion and Foot Locker
Given the investment horizon of 90 days Lulus Fashion Lounge is expected to under-perform the Foot Locker. In addition to that, Lulus Fashion is 4.09 times more volatile than Foot Locker. It trades about -0.06 of its total potential returns per unit of risk. Foot Locker is currently generating about 0.07 per unit of volatility. If you would invest 2,381 in Foot Locker on August 28, 2024 and sell it today you would earn a total of 75.00 from holding Foot Locker or generate 3.15% 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. Foot Locker
Performance |
| Timeline |
| Lulus Fashion Lounge |
| Foot Locker |
Lulus Fashion and Foot Locker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lulus Fashion and Foot Locker
The main advantage of trading using opposite Lulus Fashion and Foot Locker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lulus Fashion position performs unexpectedly, Foot Locker 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 Foot Locker will offset losses from the drop in Foot Locker's long position.| Lulus Fashion vs. Citi Trends | Lulus Fashion vs. Tillys Inc | Lulus Fashion vs. Zumiez Inc | Lulus Fashion vs. JJill Inc |
| Foot Locker vs. Abercrombie Fitch | Foot Locker vs. Urban Outfitters | Foot Locker vs. Childrens Place | Foot Locker 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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