lululemon athletica inc. (NASDAQ:LULU)

Capital Asset Pricing Model (CAPM)

Capital asset pricing model (CAPM) indicates what should be the expected or required rate of return on risky assets like lululemon athletica inc. common stock.

Rates of Return
Variance and Covariance
Systematic Risk (β) Estimation
Expected Rate of Return

Rates of Return

lululemon athletica inc., monthly rates of return

		lululemon athletica inc. (LULU)			Standard & Poor’s 500 (S&P 500)
t	Date	Price_LULU,t¹	Dividend_LULU,t¹	R_LULU,t²	Price_{S&P 500,t}	R_{S&P 500,t}³
	Feb 29, 2020	$217.41			2,954.22
1.	Mar 31, 2020	$189.55		-12.81%	2,584.59	-12.51%
2.	Apr 30, 2020	$223.48		17.90%	2,912.43	12.68%
3.	May 31, 2020	$300.10		34.28%	3,044.31	4.53%
.	.	.	.	.	.	.
.	.	.	.	.	.	.
.	.	.	.	.	.	.
70.	Dec 31, 2025	$207.81		12.83%	6,845.50	-0.05%
71.	Jan 31, 2026	$174.50		-16.03%	6,939.03	1.37%
Average (R):				0.40%		1.33%
Standard deviation:				12.01%		4.83%

		lululemon athletica inc. (LULU)			Standard & Poor’s 500 (S&P 500)
t	Date	Price_LULU,t¹	Dividend_LULU,t¹	R_LULU,t²	Price_{S&P 500,t}	R_{S&P 500,t}³
	Feb 29, 2020	$217.41			2,954.22
1.	Mar 31, 2020	$189.55		-12.81%	2,584.59	-12.51%
2.	Apr 30, 2020	$223.48		17.90%	2,912.43	12.68%
3.	May 31, 2020	$300.10		34.28%	3,044.31	4.53%
4.	Jun 30, 2020	$312.01		3.97%	3,100.29	1.84%
5.	Jul 31, 2020	$325.59		4.35%	3,271.12	5.51%
6.	Aug 31, 2020	$375.67		15.38%	3,500.31	7.01%
7.	Sep 30, 2020	$329.37		-12.32%	3,363.00	-3.92%
8.	Oct 31, 2020	$319.29		-3.06%	3,269.96	-2.77%
9.	Nov 30, 2020	$370.22		15.95%	3,621.63	10.75%
10.	Dec 31, 2020	$348.03		-5.99%	3,756.07	3.71%
11.	Jan 31, 2021	$328.68		-5.56%	3,714.24	-1.11%
12.	Feb 28, 2021	$311.68		-5.17%	3,811.15	2.61%
13.	Mar 31, 2021	$306.71		-1.59%	3,972.89	4.24%
14.	Apr 30, 2021	$335.27		9.31%	4,181.17	5.24%
15.	May 31, 2021	$323.13		-3.62%	4,204.11	0.55%
16.	Jun 30, 2021	$364.97		12.95%	4,297.50	2.22%
17.	Jul 31, 2021	$400.17		9.64%	4,395.26	2.27%
18.	Aug 31, 2021	$400.17		0.00%	4,522.68	2.90%
19.	Sep 30, 2021	$404.70		1.13%	4,307.54	-4.76%
20.	Oct 31, 2021	$466.01		15.15%	4,605.38	6.91%
21.	Nov 30, 2021	$454.41		-2.49%	4,567.00	-0.83%
22.	Dec 31, 2021	$391.45		-13.86%	4,766.18	4.36%
23.	Jan 31, 2022	$333.76		-14.74%	4,515.55	-5.26%
24.	Feb 28, 2022	$319.94		-4.14%	4,373.94	-3.14%
25.	Mar 31, 2022	$365.23		14.16%	4,530.41	3.58%
26.	Apr 30, 2022	$354.63		-2.90%	4,131.93	-8.80%
27.	May 31, 2022	$292.69		-17.47%	4,132.15	0.01%
28.	Jun 30, 2022	$272.61		-6.86%	3,785.38	-8.39%
29.	Jul 31, 2022	$310.51		13.90%	4,130.29	9.11%
30.	Aug 31, 2022	$299.96		-3.40%	3,955.00	-4.24%
31.	Sep 30, 2022	$279.56		-6.80%	3,585.62	-9.34%
32.	Oct 31, 2022	$329.04		17.70%	3,871.98	7.99%
33.	Nov 30, 2022	$380.31		15.58%	4,080.11	5.38%
34.	Dec 31, 2022	$320.38		-15.76%	3,839.50	-5.90%
35.	Jan 31, 2023	$306.88		-4.21%	4,076.60	6.18%
36.	Feb 28, 2023	$309.20		0.76%	3,970.15	-2.61%
37.	Mar 31, 2023	$364.19		17.78%	4,109.31	3.51%
38.	Apr 30, 2023	$379.93		4.32%	4,169.48	1.46%
39.	May 31, 2023	$331.93		-12.63%	4,179.83	0.25%
40.	Jun 30, 2023	$378.50		14.03%	4,376.86	4.71%
41.	Jul 31, 2023	$378.53		0.01%	4,588.96	4.85%
42.	Aug 31, 2023	$381.26		0.72%	4,507.66	-1.77%
43.	Sep 30, 2023	$385.61		1.14%	4,288.05	-4.87%
44.	Oct 31, 2023	$393.48		2.04%	4,193.80	-2.20%
45.	Nov 30, 2023	$446.80		13.55%	4,567.80	8.92%
46.	Dec 31, 2023	$511.29		14.43%	4,769.83	4.42%
47.	Jan 31, 2024	$453.82		-11.24%	4,845.65	1.59%
48.	Feb 29, 2024	$467.09		2.92%	5,096.27	5.17%
49.	Mar 31, 2024	$390.65		-16.37%	5,254.35	3.10%
50.	Apr 30, 2024	$360.60		-7.69%	5,035.69	-4.16%
51.	May 31, 2024	$311.99		-13.48%	5,277.51	4.80%
52.	Jun 30, 2024	$298.70		-4.26%	5,460.48	3.47%
53.	Jul 31, 2024	$258.66		-13.40%	5,522.30	1.13%
54.	Aug 31, 2024	$259.47		0.31%	5,648.40	2.28%
55.	Sep 30, 2024	$271.35		4.58%	5,762.48	2.02%
56.	Oct 31, 2024	$297.90		9.78%	5,705.45	-0.99%
57.	Nov 30, 2024	$320.66		7.64%	6,032.38	5.73%
58.	Dec 31, 2024	$382.41		19.26%	5,881.63	-2.50%
59.	Jan 31, 2025	$414.20		8.31%	6,040.53	2.70%
60.	Feb 28, 2025	$365.61		-11.73%	5,954.50	-1.42%
61.	Mar 31, 2025	$283.06		-22.58%	5,611.85	-5.75%
62.	Apr 30, 2025	$270.77		-4.34%	5,569.06	-0.76%
63.	May 31, 2025	$316.67		16.95%	5,911.69	6.15%
64.	Jun 30, 2025	$237.58		-24.98%	6,204.95	4.96%
65.	Jul 31, 2025	$200.53		-15.59%	6,339.39	2.17%
66.	Aug 31, 2025	$202.20		0.83%	6,460.26	1.91%
67.	Sep 30, 2025	$177.93		-12.00%	6,688.46	3.53%
68.	Oct 31, 2025	$170.54		-4.15%	6,840.20	2.27%
69.	Nov 30, 2025	$184.18		8.00%	6,849.09	0.13%
70.	Dec 31, 2025	$207.81		12.83%	6,845.50	-0.05%
71.	Jan 31, 2026	$174.50		-16.03%	6,939.03	1.37%
Average (R):				0.40%		1.33%
Standard deviation:				12.01%		4.83%

Show all

¹ Data in US$ per share of common stock, adjusted for splits and stock dividends.

² Rate of return on common stock of LULU during period t

³ Rate of return on S&P 500 (the market portfolio proxy) during period t

Variance and Covariance

lululemon athletica inc., calculation of variance and covariance of returns

t	Date	R_LULU,t	R_{S&P 500,t}	(R_LULU,t–R_LULU)²	(R_{S&P 500,t}–R_{S&P 500})²	(R_LULU,t–R_LULU)×(R_{S&P 500,t}–R_{S&P 500})
1.	Mar 31, 2020	-12.81%	-12.51%	174.60	191.48	182.84
2.	Apr 30, 2020	17.90%	12.68%	306.30	129.02	198.79
3.	May 31, 2020	34.28%	4.53%	1,148.26	10.26	108.52
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.	.	.	.	.	.	.
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70.	Dec 31, 2025	12.83%	-0.05%	154.53	1.90	-17.13
71.	Jan 31, 2026	-16.03%	1.37%	269.88	0.00	-0.67
Total (Σ):				10,104.45	1,636.00	1,925.58

t	Date	R_LULU,t	R_{S&P 500,t}	(R_LULU,t–R_LULU)²	(R_{S&P 500,t}–R_{S&P 500})²	(R_LULU,t–R_LULU)×(R_{S&P 500,t}–R_{S&P 500})
1.	Mar 31, 2020	-12.81%	-12.51%	174.60	191.48	182.84
2.	Apr 30, 2020	17.90%	12.68%	306.30	129.02	198.79
3.	May 31, 2020	34.28%	4.53%	1,148.26	10.26	108.52
4.	Jun 30, 2020	3.97%	1.84%	12.74	0.26	1.83
5.	Jul 31, 2020	4.35%	5.51%	15.63	17.51	16.54
6.	Aug 31, 2020	15.38%	7.01%	224.47	32.27	85.11
7.	Sep 30, 2020	-12.32%	-3.92%	161.89	27.55	66.78
8.	Oct 31, 2020	-3.06%	-2.77%	11.97	16.75	14.16
9.	Nov 30, 2020	15.95%	10.75%	241.87	88.91	146.64
10.	Dec 31, 2020	-5.99%	3.71%	40.87	5.70	-15.26
11.	Jan 31, 2021	-5.56%	-1.11%	35.51	5.95	14.54
12.	Feb 28, 2021	-5.17%	2.61%	31.04	1.65	-7.15
13.	Mar 31, 2021	-1.59%	4.24%	3.97	8.52	-5.82
14.	Apr 30, 2021	9.31%	5.24%	79.44	15.34	34.91
15.	May 31, 2021	-3.62%	0.55%	16.16	0.60	3.12
16.	Jun 30, 2021	12.95%	2.22%	157.49	0.80	11.24
17.	Jul 31, 2021	9.64%	2.27%	85.48	0.90	8.78
18.	Aug 31, 2021	0.00%	2.90%	0.16	2.48	-0.63
19.	Sep 30, 2021	1.13%	-4.76%	0.54	37.00	-4.46
20.	Oct 31, 2021	15.15%	6.91%	217.58	31.23	82.44
21.	Nov 30, 2021	-2.49%	-0.83%	8.34	4.66	6.24
22.	Dec 31, 2021	-13.86%	4.36%	203.19	9.22	-43.27
23.	Jan 31, 2022	-14.74%	-5.26%	229.11	43.35	99.66
24.	Feb 28, 2022	-4.14%	-3.14%	20.61	19.91	20.25
25.	Mar 31, 2022	14.16%	3.58%	189.25	5.07	30.98
26.	Apr 30, 2022	-2.90%	-8.80%	10.90	102.44	33.41
27.	May 31, 2022	-17.47%	0.01%	319.16	1.74	23.59
28.	Jun 30, 2022	-6.86%	-8.39%	52.70	94.43	70.54
29.	Jul 31, 2022	13.90%	9.11%	182.35	60.62	105.14
30.	Aug 31, 2022	-3.40%	-4.24%	14.41	31.02	21.15
31.	Sep 30, 2022	-6.80%	-9.34%	51.84	113.75	76.79
32.	Oct 31, 2022	17.70%	7.99%	299.30	44.37	115.23
33.	Nov 30, 2022	15.58%	5.38%	230.51	16.40	61.49
34.	Dec 31, 2022	-15.76%	-5.90%	261.05	52.17	116.70
35.	Jan 31, 2023	-4.21%	6.18%	21.28	23.52	-22.37
36.	Feb 28, 2023	0.76%	-2.61%	0.13	15.50	-1.41
37.	Mar 31, 2023	17.78%	3.51%	302.26	4.75	37.89
38.	Apr 30, 2023	4.32%	1.46%	15.39	0.02	0.54
39.	May 31, 2023	-12.63%	0.25%	169.86	1.16	14.04
40.	Jun 30, 2023	14.03%	4.71%	185.81	11.48	46.19
41.	Jul 31, 2023	0.01%	4.85%	0.15	12.39	-1.38
42.	Aug 31, 2023	0.72%	-1.77%	0.10	9.59	-1.00
43.	Sep 30, 2023	1.14%	-4.87%	0.55	38.41	-4.60
44.	Oct 31, 2023	2.04%	-2.20%	2.70	12.42	-5.79
45.	Nov 30, 2023	13.55%	8.92%	172.97	57.64	99.85
46.	Dec 31, 2023	14.43%	4.42%	196.97	9.59	43.47
47.	Jan 31, 2024	-11.24%	1.59%	135.47	0.07	-3.07
48.	Feb 29, 2024	2.92%	5.17%	6.38	14.80	9.71
49.	Mar 31, 2024	-16.37%	3.10%	281.04	3.16	-29.78
50.	Apr 30, 2024	-7.69%	-4.16%	65.47	30.11	44.40
51.	May 31, 2024	-13.48%	4.80%	192.64	12.09	-48.25
52.	Jun 30, 2024	-4.26%	3.47%	21.70	4.59	-9.98
53.	Jul 31, 2024	-13.40%	1.13%	190.54	0.04	2.67
54.	Aug 31, 2024	0.31%	2.28%	0.01	0.92	-0.08
55.	Sep 30, 2024	4.58%	2.02%	17.47	0.48	2.90
56.	Oct 31, 2024	9.78%	-0.99%	88.09	5.36	-21.73
57.	Nov 30, 2024	7.64%	5.73%	52.43	19.40	31.89
58.	Dec 31, 2024	19.26%	-2.50%	355.63	14.63	-72.13
59.	Jan 31, 2025	8.31%	2.70%	62.63	1.89	10.89
60.	Feb 28, 2025	-11.73%	-1.42%	147.14	7.56	33.36
61.	Mar 31, 2025	-22.58%	-5.75%	527.97	50.13	162.68
62.	Apr 30, 2025	-4.34%	-0.76%	22.48	4.36	9.90
63.	May 31, 2025	16.95%	6.15%	273.99	23.30	79.90
64.	Jun 30, 2025	-24.98%	4.96%	643.87	13.21	-92.24
65.	Jul 31, 2025	-15.59%	2.17%	255.80	0.71	-13.45
66.	Aug 31, 2025	0.83%	1.91%	0.19	0.34	0.25
67.	Sep 30, 2025	-12.00%	3.53%	153.81	4.87	-27.37
68.	Oct 31, 2025	-4.15%	2.27%	20.72	0.89	-4.29
69.	Nov 30, 2025	8.00%	0.13%	57.75	1.43	-9.09
70.	Dec 31, 2025	12.83%	-0.05%	154.53	1.90	-17.13
71.	Jan 31, 2026	-16.03%	1.37%	269.88	0.00	-0.67
Total (Σ):				10,104.45	1,636.00	1,925.58

Show all

Variance_LULU = Σ(R_LULU,t–R_LULU)² ÷ (71 – 1)
= 10,104.45 ÷ (71 – 1)
= 144.35

Variance_{S&P 500} = Σ(R_{S&P 500,t}–R_{S&P 500})² ÷ (71 – 1)
= 1,636.00 ÷ (71 – 1)
= 23.37

Covariance_{LULU, S&P 500} = Σ(R_LULU,t–R_LULU)×(R_{S&P 500,t}–R_{S&P 500}) ÷ (71 – 1)
= 1,925.58 ÷ (71 – 1)
= 27.51

Systematic Risk (β) Estimation

Variance_LULU	144.35
Variance_{S&P 500}	23.37
Covariance_{LULU, S&P 500}	27.51
Correlation coefficient_{LULU, S&P 500}¹	0.47
β_LULU²	1.18
α_LULU³	-1.16%

Calculations

¹ Correlation coefficient_{LULU, S&P 500}
= Covariance_{LULU, S&P 500} ÷ (Standard deviation_LULU × Standard deviation_{S&P 500})
= 27.51 ÷ (12.01% × 4.83%)
= 0.47

² β_LULU
= Covariance_{LULU, S&P 500} ÷ Variance_{S&P 500}
= 27.51 ÷ 23.37
= 1.18

³ α_LULU
= Average_LULU – β_LULU × Average_{S&P 500}
= 0.40% – 1.18 × 1.33%
= -1.16%

Expected Rate of Return

Assumptions
Rate of return on LT Treasury Composite¹	R_F	4.94%
Expected rate of return on market portfolio²	E(R_M)	17.36%
Systematic risk (β) of lululemon athletica inc. common stock	β_LULU	1.18

Expected rate of return on lululemon athletica inc. common stock³	E(R_LULU)	19.56%

¹ Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

² See details »

³ E(R_LULU) = R_F + β_LULU [E(R_M) – R_F]
= 4.94% + 1.18 [17.36% – 4.94%]
= 19.56%