Correlation Between Westrock Coffee and Lululemon Athletica
Can any of the company-specific risk be diversified away by investing in both Westrock Coffee 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 Westrock Coffee and Lululemon Athletica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westrock Coffee and Lululemon Athletica, you can compare the effects of market volatilities on Westrock Coffee 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 Westrock Coffee with a short position of Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westrock Coffee and Lululemon Athletica.
Diversification Opportunities for Westrock Coffee and Lululemon Athletica
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Westrock and Lululemon is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica and Westrock Coffee 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 Westrock Coffee 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 Westrock Coffee i.e., Westrock Coffee and Lululemon Athletica go up and down completely randomly.
Pair Corralation between Westrock Coffee and Lululemon Athletica
Given the investment horizon of 90 days Westrock Coffee is expected to under-perform the Lululemon Athletica. In addition to that, Westrock Coffee is 1.13 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 0.02 per unit of volatility. If you would invest 29,866 in Lululemon Athletica on August 31, 2024 and sell it today you would earn a total of 2,086 from holding Lululemon Athletica or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Westrock Coffee vs. Lululemon Athletica
Performance |
| Timeline |
| Westrock Coffee |
| Lululemon Athletica |
Westrock Coffee and Lululemon Athletica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westrock Coffee and Lululemon Athletica
The main advantage of trading using opposite Westrock Coffee and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westrock Coffee 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.| Westrock Coffee vs. Coffee Holding Co | Westrock Coffee vs. Bridgford Foods | Westrock Coffee vs. John B Sanfilippo | Westrock Coffee vs. Treehouse Foods |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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