Correlation Between Lululemon Athletica and Canadian Imperial
Can any of the company-specific risk be diversified away by investing in both Lululemon Athletica and Canadian Imperial 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 Canadian Imperial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lululemon Athletica and Canadian Imperial Bank, you can compare the effects of market volatilities on Lululemon Athletica and Canadian Imperial 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 Canadian Imperial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lululemon Athletica and Canadian Imperial.
Diversification Opportunities for Lululemon Athletica and Canadian Imperial
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lululemon and Canadian is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lululemon Athletica and Canadian Imperial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Imperial Bank 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 Canadian Imperial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Imperial Bank has no effect on the direction of Lululemon Athletica i.e., Lululemon Athletica and Canadian Imperial go up and down completely randomly.
Pair Corralation between Lululemon Athletica and Canadian Imperial
Given the investment horizon of 90 days Lululemon Athletica is expected to under-perform the Canadian Imperial. In addition to that, Lululemon Athletica is 2.48 times more volatile than Canadian Imperial Bank. It trades about -0.15 of its total potential returns per unit of risk. Canadian Imperial Bank is currently generating about -0.22 per unit of volatility. If you would invest 6,745 in Canadian Imperial Bank on January 26, 2024 and sell it today you would lose (229.00) from holding Canadian Imperial Bank or give up 3.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lululemon Athletica vs. Canadian Imperial Bank
Performance |
| Timeline |
| Lululemon Athletica |
| Canadian Imperial Bank |
Lululemon Athletica and Canadian Imperial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lululemon Athletica and Canadian Imperial
The main advantage of trading using opposite Lululemon Athletica and Canadian Imperial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lululemon Athletica position performs unexpectedly, Canadian Imperial 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 Canadian Imperial will offset losses from the drop in Canadian Imperial's long position.| Lululemon Athletica vs. Ermenegildo Zegna NV | Lululemon Athletica vs. G III Apparel Group | Lululemon Athletica vs. Oxford Industries | Lululemon Athletica vs. Kontoor Brands |
| Canadian Imperial vs. Brookfield | Canadian Imperial vs. Apple Inc CDR | Canadian Imperial vs. CHEVRON CDR | Canadian Imperial vs. Amazon CDR |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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