Correlation Between Lulus Fashion and Guess
Can any of the company-specific risk be diversified away by investing in both Lulus Fashion and Guess 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 Guess 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 Guess Inc, you can compare the effects of market volatilities on Lulus Fashion and Guess 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 Guess. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lulus Fashion and Guess.
Diversification Opportunities for Lulus Fashion and Guess
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lulus and Guess is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Lulus Fashion Lounge and Guess Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guess Inc 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 Guess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guess Inc has no effect on the direction of Lulus Fashion i.e., Lulus Fashion and Guess go up and down completely randomly.
Pair Corralation between Lulus Fashion and Guess
Given the investment horizon of 90 days Lulus Fashion Lounge is expected to under-perform the Guess. In addition to that, Lulus Fashion is 5.41 times more volatile than Guess Inc. It trades about -0.06 of its total potential returns per unit of risk. Guess Inc is currently generating about -0.1 per unit of volatility. If you would invest 1,781 in Guess Inc on August 24, 2024 and sell it today you would lose (74.00) from holding Guess Inc or give up 4.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lulus Fashion Lounge vs. Guess Inc
Performance |
| Timeline |
| Lulus Fashion Lounge |
| Guess Inc |
Lulus Fashion and Guess Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lulus Fashion and Guess
The main advantage of trading using opposite Lulus Fashion and Guess positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lulus Fashion position performs unexpectedly, Guess 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 Guess will offset losses from the drop in Guess' long position.| Lulus Fashion vs. Citi Trends | Lulus Fashion vs. Tillys Inc | Lulus Fashion vs. Zumiez Inc | Lulus Fashion vs. JJill Inc |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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