Correlation Between Lulus Fashion and Aveanna Healthcare

Can any of the company-specific risk be diversified away by investing in both Lulus Fashion and Aveanna Healthcare 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 Aveanna Healthcare 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 Aveanna Healthcare Holdings, you can compare the effects of market volatilities on Lulus Fashion and Aveanna Healthcare 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 Aveanna Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lulus Fashion and Aveanna Healthcare.

Diversification Opportunities for Lulus Fashion and Aveanna Healthcare

-0.4

Correlation Coefficient

Lulus Fashion  Aveanna Healthcare

Very good diversification

The 3 months correlation between Lulus and Aveanna is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lulus Fashion Lounge and Aveanna Healthcare Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aveanna Healthcare 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 Aveanna Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aveanna Healthcare has no effect on the direction of Lulus Fashion i.e., Lulus Fashion and Aveanna Healthcare go up and down completely randomly.

Pair Corralation between Lulus Fashion and Aveanna Healthcare

Given the investment horizon of 90 days Lulus Fashion Lounge is expected to under-perform the Aveanna Healthcare. In addition to that, Lulus Fashion is 1.83 times more volatile than Aveanna Healthcare Holdings. It trades about -0.03 of its total potential returns per unit of risk. Aveanna Healthcare Holdings is currently generating about 0.0 per unit of volatility. If you would invest  539.00  in Aveanna Healthcare Holdings on September 13, 2024 and sell it today you would lose (17.00) from holding Aveanna Healthcare Holdings or give up 3.15% of portfolio value over 90 days.

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

Lulus Fashion Lounge  vs.  Aveanna Healthcare Holdings

Lulus Fashion Lounge

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lulus Fashion Lounge has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Aveanna Healthcare

Risk-Adjusted Performance

0 of 100

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 latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Lulus Fashion and Aveanna Healthcare

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

The idea behind Lulus Fashion Lounge and Aveanna Healthcare Holdings 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.