Correlation Between Take Two and Lululemon Athletica
Can any of the company-specific risk be diversified away by investing in both Take Two 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 Take Two and Lululemon Athletica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Take Two Interactive Software and Lululemon Athletica, you can compare the effects of market volatilities on Take Two 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 Take Two with a short position of Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Lululemon Athletica.
Diversification Opportunities for Take Two and Lululemon Athletica
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Take and Lululemon is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica and Take Two 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 Take Two Interactive Software 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 Take Two i.e., Take Two and Lululemon Athletica go up and down completely randomly.
Pair Corralation between Take Two and Lululemon Athletica
Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 0.77 times more return on investment than Lululemon Athletica. However, Take Two Interactive Software is 1.29 times less risky than Lululemon Athletica. It trades about 0.13 of its potential returns per unit of risk. Lululemon Athletica is currently generating about 0.07 per unit of risk. If you would invest 21,140 in Take Two Interactive Software on September 1, 2024 and sell it today you would earn a total of 7,202 from holding Take Two Interactive Software or generate 34.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.22% |
| Values | Daily Returns |
Take Two Interactive Software vs. Lululemon Athletica
Performance |
| Timeline |
| Take Two Interactive |
| Lululemon Athletica |
Take Two and Lululemon Athletica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and Lululemon Athletica
The main advantage of trading using opposite Take Two and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two 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.| Take Two vs. Fras le SA | Take Two vs. Energisa SA | Take Two vs. Clave Indices De | Take Two vs. BTG Pactual Logstica |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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