Correlation Between Bram Indus and Lululemon Athletica

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Can any of the company-specific risk be diversified away by investing in both Bram Indus and Lululemon Athletica 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 Bram Indus and Lululemon Athletica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bram Indus and Lululemon Athletica, you can compare the effects of market volatilities on Bram Indus and Lululemon Athletica 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 Bram Indus with a short position of Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bram Indus and Lululemon Athletica.

Diversification Opportunities for Bram Indus and Lululemon Athletica

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Bram and Lululemon is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bram Indus and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica and Bram Indus 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 Bram Indus are associated (or correlated) with Lululemon Athletica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lululemon Athletica has no effect on the direction of Bram Indus i.e., Bram Indus and Lululemon Athletica go up and down completely randomly.

Pair Corralation between Bram Indus and Lululemon Athletica

Assuming the 90 days trading horizon Bram Indus is expected to generate 0.95 times more return on investment than Lululemon Athletica. However, Bram Indus is 1.06 times less risky than Lululemon Athletica. It trades about 0.01 of its potential returns per unit of risk. Lululemon Athletica is currently generating about -0.2 per unit of risk. If you would invest  15,550  in Bram Indus on December 30, 2023 and sell it today you would lose (50.00) from holding Bram Indus or give up 0.32% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy81.82%
ValuesDaily Returns

Bram Indus  vs.  Lululemon Athletica

 Performance 
       Timeline  
Bram Indus 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Bram Indus are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bram Indus may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Lululemon Athletica 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Lululemon Athletica has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in April 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bram Indus and Lululemon Athletica Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bram Indus and Lululemon Athletica

The main advantage of trading using opposite Bram Indus and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bram Indus position performs unexpectedly, Lululemon Athletica 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 Lululemon Athletica will offset losses from the drop in Lululemon Athletica's long position.
The idea behind Bram Indus and Lululemon Athletica 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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