Correlation Between Vince Holding and Lululemon Athletica
Can any of the company-specific risk be diversified away by investing in both Vince Holding 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 Vince Holding and Lululemon Athletica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vince Holding Corp and Lululemon Athletica, you can compare the effects of market volatilities on Vince Holding 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 Vince Holding with a short position of Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vince Holding and Lululemon Athletica.
Diversification Opportunities for Vince Holding and Lululemon Athletica
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vince and Lululemon is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Vince Holding Corp and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica and Vince Holding 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 Vince Holding Corp 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 Vince Holding i.e., Vince Holding and Lululemon Athletica go up and down completely randomly.
Pair Corralation between Vince Holding and Lululemon Athletica
Given the investment horizon of 90 days Vince Holding Corp is expected to under-perform the Lululemon Athletica. In addition to that, Vince Holding is 2.6 times more volatile than Lululemon Athletica. It trades about -0.03 of its total potential returns per unit of risk. Lululemon Athletica is currently generating about -0.01 per unit of volatility. If you would invest 38,113 in Lululemon Athletica on August 26, 2024 and sell it today you would lose (6,402) from holding Lululemon Athletica or give up 16.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Vince Holding Corp vs. Lululemon Athletica
Performance |
| Timeline |
| Vince Holding Corp |
| Lululemon Athletica |
Vince Holding and Lululemon Athletica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vince Holding and Lululemon Athletica
The main advantage of trading using opposite Vince Holding and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vince Holding 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.| Vince Holding vs. VF Corporation | Vince Holding vs. Levi Strauss Co | Vince Holding vs. Under Armour A | Vince Holding vs. Oxford Industries |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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