Correlation Between Weibo Corp and Lululemon Athletica
Can any of the company-specific risk be diversified away by investing in both Weibo Corp 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 Weibo Corp and Lululemon Athletica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and Lululemon Athletica, you can compare the effects of market volatilities on Weibo Corp 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 Weibo Corp with a short position of Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Lululemon Athletica.
Diversification Opportunities for Weibo Corp and Lululemon Athletica
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Weibo and Lululemon is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica and Weibo Corp 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 Weibo 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 Weibo Corp i.e., Weibo Corp and Lululemon Athletica go up and down completely randomly.
Pair Corralation between Weibo Corp and Lululemon Athletica
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 1.17 times less return on investment than Lululemon Athletica. In addition to that, Weibo Corp is 1.18 times more volatile than Lululemon Athletica. It trades about 0.11 of its total potential returns per unit of risk. Lululemon Athletica is currently generating about 0.15 per unit of volatility. If you would invest 29,790 in Lululemon Athletica on September 1, 2024 and sell it today you would earn a total of 2,276 from holding Lululemon Athletica or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weibo Corp vs. Lululemon Athletica
Performance |
| Timeline |
| Weibo Corp |
| Lululemon Athletica |
Weibo Corp and Lululemon Athletica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and Lululemon Athletica
The main advantage of trading using opposite Weibo Corp and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp 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.| Weibo Corp vs. MediaAlpha | Weibo Corp vs. Asset Entities Class | Weibo Corp vs. Shutterstock | Weibo Corp vs. Match Group |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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