Correlation Between ASPEN TECHINC and Lululemon Athletica
Can any of the company-specific risk be diversified away by investing in both ASPEN TECHINC 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 ASPEN TECHINC and Lululemon Athletica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASPEN TECHINC DL and Lululemon Athletica, you can compare the effects of market volatilities on ASPEN TECHINC 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 ASPEN TECHINC with a short position of Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASPEN TECHINC and Lululemon Athletica.
Diversification Opportunities for ASPEN TECHINC and Lululemon Athletica
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ASPEN and Lululemon is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding ASPEN TECHINC DL and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica and ASPEN TECHINC 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 ASPEN TECHINC DL 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 ASPEN TECHINC i.e., ASPEN TECHINC and Lululemon Athletica go up and down completely randomly.
Pair Corralation between ASPEN TECHINC and Lululemon Athletica
Assuming the 90 days horizon ASPEN TECHINC DL is expected to generate 0.99 times more return on investment than Lululemon Athletica. However, ASPEN TECHINC DL is 1.01 times less risky than Lululemon Athletica. It trades about 0.04 of its potential returns per unit of risk. Lululemon Athletica is currently generating about 0.04 per unit of risk. If you would invest 17,371 in ASPEN TECHINC DL on October 11, 2024 and sell it today you would earn a total of 6,629 from holding ASPEN TECHINC DL or generate 38.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
ASPEN TECHINC DL vs. Lululemon Athletica
Performance |
| Timeline |
| ASPEN TECHINC DL |
| Lululemon Athletica |
ASPEN TECHINC and Lululemon Athletica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASPEN TECHINC and Lululemon Athletica
The main advantage of trading using opposite ASPEN TECHINC and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASPEN TECHINC 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.| ASPEN TECHINC vs. Automatic Data Processing | ASPEN TECHINC vs. CODERE ONLINE LUX | ASPEN TECHINC vs. ZhongAn Online P | ASPEN TECHINC vs. SILVER BULLET DATA |
| Lululemon Athletica vs. NH HOTEL GROUP | Lululemon Athletica vs. Xenia Hotels Resorts | Lululemon Athletica vs. Dalata Hotel Group | Lululemon Athletica vs. DALATA HOTEL |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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