Correlation Between Lulus Fashion and AKA Brands
Can any of the company-specific risk be diversified away by investing in both Lulus Fashion and AKA Brands 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 Lulus Fashion and AKA Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lulus Fashion Lounge and AKA Brands Holding, you can compare the effects of market volatilities on Lulus Fashion and AKA Brands 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 Lulus Fashion with a short position of AKA Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lulus Fashion and AKA Brands.
Diversification Opportunities for Lulus Fashion and AKA Brands
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lulus and AKA is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lulus Fashion Lounge and AKA Brands Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKA Brands Holding and Lulus Fashion 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 Lulus Fashion Lounge are associated (or correlated) with AKA Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKA Brands Holding has no effect on the direction of Lulus Fashion i.e., Lulus Fashion and AKA Brands go up and down completely randomly.
Pair Corralation between Lulus Fashion and AKA Brands
Given the investment horizon of 90 days Lulus Fashion Lounge is expected to under-perform the AKA Brands. But the stock apears to be less risky and, when comparing its historical volatility, Lulus Fashion Lounge is 1.24 times less risky than AKA Brands. The stock trades about 0.0 of its potential returns per unit of risk. The AKA Brands Holding is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,040 in AKA Brands Holding on September 6, 2024 and sell it today you would earn a total of 92.00 from holding AKA Brands Holding or generate 4.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lulus Fashion Lounge vs. AKA Brands Holding
Performance |
Timeline |
Lulus Fashion Lounge |
AKA Brands Holding |
Lulus Fashion and AKA Brands Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lulus Fashion and AKA Brands
The main advantage of trading using opposite Lulus Fashion and AKA Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lulus Fashion position performs unexpectedly, AKA Brands 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 AKA Brands will offset losses from the drop in AKA Brands' long position.Lulus Fashion vs. Citi Trends | Lulus Fashion vs. Tillys Inc | Lulus Fashion vs. Zumiez Inc | Lulus Fashion vs. JJill Inc |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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