Correlation Between Lululemon Athletica and Uber Technologies
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Uber Technologies 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 Uber Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Uber Technologies, you can compare the effects of market volatilities on Lululemon Athletica and Uber Technologies 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 Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Uber Technologies.
Diversification Opportunities for Lululemon Athletica and Uber Technologies
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lululemon and Uber is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Uber Technologies go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Uber Technologies
Given the investment horizon of 90 days Lululemon Athletica is expected to generate 1.07 times more return on investment than Uber Technologies. However, Lululemon Athletica is 1.07 times more volatile than Uber Technologies. It trades about 0.21 of its potential returns per unit of risk. Uber Technologies is currently generating about -0.1 per unit of risk. If you would invest 25,980 in Lululemon Athletica on September 23, 2024 and sell it today you would earn a total of 11,962 from holding Lululemon Athletica or generate 46.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Lululemon Athletica vs. Uber Technologies
Performance |
Timeline |
Lululemon Athletica |
Uber Technologies |
Lululemon Athletica and Uber Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lululemon Athletica and Uber Technologies
The main advantage of trading using opposite Lululemon Athletica and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Uber Technologies 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 Uber Technologies will offset losses from the drop in Uber Technologies' long position.Lululemon Athletica vs. Amer Sports, | Lululemon Athletica vs. Brunswick | Lululemon Athletica vs. BRP Inc | Lululemon Athletica vs. Twin Vee Powercats |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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