Correlation Between NEXT Plc and Lululemon Athletica
Can any of the company-specific risk be diversified away by investing in both NEXT Plc and Lululemon Athletica 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 NEXT Plc and Lululemon Athletica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXT plc and Lululemon Athletica, you can compare the effects of market volatilities on NEXT Plc and Lululemon Athletica 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 NEXT Plc with a short position of Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXT Plc and Lululemon Athletica.
Diversification Opportunities for NEXT Plc and Lululemon Athletica
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NEXT and Lululemon is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding NEXT plc and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica and NEXT Plc 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 NEXT plc are associated (or correlated) with Lululemon Athletica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lululemon Athletica has no effect on the direction of NEXT Plc i.e., NEXT Plc and Lululemon Athletica go up and down completely randomly.
Pair Corralation between NEXT Plc and Lululemon Athletica
Assuming the 90 days horizon NEXT Plc is expected to generate 7.54 times less return on investment than Lululemon Athletica. But when comparing it to its historical volatility, NEXT plc is 1.21 times less risky than Lululemon Athletica. It trades about 0.02 of its potential returns per unit of risk. Lululemon Athletica is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 36,730 in Lululemon Athletica on November 2, 2024 and sell it today you would earn a total of 2,470 from holding Lululemon Athletica or generate 6.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEXT plc vs. Lululemon Athletica
Performance |
| Timeline |
| NEXT plc |
| Lululemon Athletica |
NEXT Plc and Lululemon Athletica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXT Plc and Lululemon Athletica
The main advantage of trading using opposite NEXT Plc and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXT Plc position performs unexpectedly, Lululemon Athletica 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 Lululemon Athletica will offset losses from the drop in Lululemon Athletica's long position.| NEXT Plc vs. Direct Line Insurance | NEXT Plc vs. Carnegie Clean Energy | NEXT Plc vs. Ryanair Holdings plc | NEXT Plc vs. Altair Engineering |
| Lululemon Athletica vs. ALERION CLEANPOWER | Lululemon Athletica vs. Commercial Vehicle Group | Lululemon Athletica vs. Grupo Carso SAB | Lululemon Athletica vs. SEI INVESTMENTS |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |