Correlation Between Lululemon Athletica and Anterix

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

By analyzing existing cross correlation between Lululemon Athletica and Anterix, you can compare the effects of market volatilities on Lululemon Athletica and Anterix 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 Lululemon Athletica with a short position of Anterix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Anterix.

Diversification Opportunities for Lululemon Athletica and Anterix

-0.47

Correlation Coefficient

Lululemon Athletica  Anterix

Very good diversification

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

Pair Corralation between Lululemon Athletica and Anterix

Given the investment horizon of 90 days Lululemon Athletica is expected to generate 1.31 times more return on investment than Anterix. However, Lululemon Athletica is 1.31 times more volatile than Anterix. It trades about 0.21 of its potential returns per unit of risk. Anterix is currently generating about -0.09 per unit of risk. If you would invest  27,020  in Lululemon Athletica on September 18, 2024 and sell it today you would earn a total of  11,954  from holding Lululemon Athletica or generate 44.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Lululemon Athletica  vs.  Anterix

Lululemon Athletica

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lululemon Athletica are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, Lululemon Athletica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Anterix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anterix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lululemon Athletica and Anterix

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

The idea behind Lululemon Athletica and Anterix 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.