Correlation Between Lulus Fashion and Industria
Can any of the company-specific risk be diversified away by investing in both Lulus Fashion and Industria 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 Industria 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 Industria de Diseo, you can compare the effects of market volatilities on Lulus Fashion and Industria 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 Industria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lulus Fashion and Industria.
Diversification Opportunities for Lulus Fashion and Industria
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lulus and Industria is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Lulus Fashion Lounge and Industria de Diseo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industria de Diseo 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 Industria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industria de Diseo has no effect on the direction of Lulus Fashion i.e., Lulus Fashion and Industria go up and down completely randomly.
Pair Corralation between Lulus Fashion and Industria
Given the investment horizon of 90 days Lulus Fashion Lounge is expected to under-perform the Industria. In addition to that, Lulus Fashion is 2.6 times more volatile than Industria de Diseo. It trades about -0.01 of its total potential returns per unit of risk. Industria de Diseo is currently generating about 0.08 per unit of volatility. If you would invest 4,224 in Industria de Diseo on August 27, 2024 and sell it today you would earn a total of 1,390 from holding Industria de Diseo or generate 32.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lulus Fashion Lounge vs. Industria de Diseo
Performance |
| Timeline |
| Lulus Fashion Lounge |
| Industria de Diseo |
Lulus Fashion and Industria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lulus Fashion and Industria
The main advantage of trading using opposite Lulus Fashion and Industria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lulus Fashion position performs unexpectedly, Industria 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 Industria will offset losses from the drop in Industria's long position.| Lulus Fashion vs. Citi Trends | Lulus Fashion vs. Tillys Inc | Lulus Fashion vs. Zumiez Inc | Lulus Fashion vs. JJill Inc |
| Industria vs. Reitmans Limited | Industria vs. Reitmans Limited | Industria vs. Lulus Fashion Lounge | Industria vs. Duluth Holdings |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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