Correlation Between Under Armour and Lowes Companies
Can any of the company-specific risk be diversified away by investing in both Under Armour and Lowes Companies 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 Under Armour and Lowes Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Under Armour C and Lowes Companies, you can compare the effects of market volatilities on Under Armour and Lowes Companies 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 Under Armour with a short position of Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and Lowes Companies.
Diversification Opportunities for Under Armour and Lowes Companies
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Under and Lowes is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies and Under Armour 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 Under Armour C are associated (or correlated) with Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of Under Armour i.e., Under Armour and Lowes Companies go up and down completely randomly.
Pair Corralation between Under Armour and Lowes Companies
Allowing for the 90-day total investment horizon Under Armour C is expected to generate 1.22 times more return on investment than Lowes Companies. However, Under Armour is 1.22 times more volatile than Lowes Companies. It trades about 0.19 of its potential returns per unit of risk. Lowes Companies is currently generating about 0.1 per unit of risk. If you would invest 629.00 in Under Armour C on February 12, 2024 and sell it today you would earn a total of 26.00 from holding Under Armour C or generate 4.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Under Armour C vs. Lowes Companies
Performance |
| Timeline |
| Under Armour C |
| Lowes Companies |
Under Armour and Lowes Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Under Armour and Lowes Companies
The main advantage of trading using opposite Under Armour and Lowes Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour position performs unexpectedly, Lowes Companies 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 Lowes Companies will offset losses from the drop in Lowes Companies' long position.The idea behind Under Armour C and Lowes Companies 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.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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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