Correlation Between Aveanna Healthcare and Lulus Fashion

Can any of the company-specific risk be diversified away by investing in both Aveanna Healthcare and Lulus Fashion 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 Aveanna Healthcare and Lulus Fashion into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aveanna Healthcare Holdings and Lulus Fashion Lounge, you can compare the effects of market volatilities on Aveanna Healthcare and Lulus Fashion 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 Aveanna Healthcare with a short position of Lulus Fashion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aveanna Healthcare and Lulus Fashion.

Diversification Opportunities for Aveanna Healthcare and Lulus Fashion

-0.47

Correlation Coefficient

Aveanna Healthcare  Lulus Fashion

Very good diversification

The 3 months correlation between Aveanna and Lulus is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Aveanna Healthcare Holdings and Lulus Fashion Lounge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lulus Fashion Lounge and Aveanna Healthcare 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 Aveanna Healthcare Holdings are associated (or correlated) with Lulus Fashion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lulus Fashion Lounge has no effect on the direction of Aveanna Healthcare i.e., Aveanna Healthcare and Lulus Fashion go up and down completely randomly.

Pair Corralation between Aveanna Healthcare and Lulus Fashion

Given the investment horizon of 90 days Aveanna Healthcare Holdings is expected to generate 0.44 times more return on investment than Lulus Fashion. However, Aveanna Healthcare Holdings is 2.26 times less risky than Lulus Fashion. It trades about 0.23 of its potential returns per unit of risk. Lulus Fashion Lounge is currently generating about 0.0 per unit of risk. If you would invest  451.00  in Aveanna Healthcare Holdings on September 5, 2024 and sell it today you would earn a total of  98.00  from holding Aveanna Healthcare Holdings or generate 21.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Aveanna Healthcare Holdings  vs.  Lulus Fashion Lounge

Aveanna Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aveanna Healthcare Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Aveanna Healthcare is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Lulus Fashion Lounge

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lulus Fashion Lounge are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Lulus Fashion may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aveanna Healthcare and Lulus Fashion

The main advantage of trading using opposite Aveanna Healthcare and Lulus Fashion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aveanna Healthcare position performs unexpectedly, Lulus Fashion 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 Lulus Fashion will offset losses from the drop in Lulus Fashion's long position.

The idea behind Aveanna Healthcare Holdings and Lulus Fashion Lounge pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..