Correlation Between Software Acquisition and Lululemon Athletica
Can any of the company-specific risk be diversified away by investing in both Software Acquisition 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 Software Acquisition and Lululemon Athletica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Software Acquisition Group and Lululemon Athletica, you can compare the effects of market volatilities on Software Acquisition 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 Software Acquisition with a short position of Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Software Acquisition and Lululemon Athletica.
Diversification Opportunities for Software Acquisition and Lululemon Athletica
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Software and Lululemon is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Software Acquisition Group and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica and Software Acquisition 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 Software Acquisition Group 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 Software Acquisition i.e., Software Acquisition and Lululemon Athletica go up and down completely randomly.
Pair Corralation between Software Acquisition and Lululemon Athletica
Given the investment horizon of 90 days Software Acquisition is expected to generate 2.08 times less return on investment than Lululemon Athletica. In addition to that, Software Acquisition is 1.61 times more volatile than Lululemon Athletica. It trades about 0.0 of its total potential returns per unit of risk. Lululemon Athletica is currently generating about 0.02 per unit of volatility. If you would invest 32,521 in Lululemon Athletica on September 5, 2024 and sell it today you would earn a total of 1,545 from holding Lululemon Athletica or generate 4.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Software Acquisition Group vs. Lululemon Athletica
Performance |
| Timeline |
| Software Acquisition |
| Lululemon Athletica |
Software Acquisition and Lululemon Athletica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Software Acquisition and Lululemon Athletica
The main advantage of trading using opposite Software Acquisition and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Software Acquisition 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.| Software Acquisition vs. Lululemon Athletica | Software Acquisition vs. Chewy Inc | Software Acquisition vs. Simon Property Group | Software Acquisition vs. Flexible Solutions International |
| Lululemon Athletica vs. VF Corporation | Lululemon Athletica vs. Levi Strauss Co | Lululemon Athletica vs. Under Armour A | Lululemon Athletica vs. Columbia Sportswear |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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