Correlation Between CNH Industrial and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Burlington Stores 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 CNH Industrial and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNH Industrial NV and Burlington Stores, you can compare the effects of market volatilities on CNH Industrial and Burlington Stores 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 CNH Industrial with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Burlington Stores.
Diversification Opportunities for CNH Industrial and Burlington Stores
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CNH and Burlington is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and CNH Industrial 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 CNH Industrial NV are associated (or correlated) with Burlington Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burlington Stores has no effect on the direction of CNH Industrial i.e., CNH Industrial and Burlington Stores go up and down completely randomly.
Pair Corralation between CNH Industrial and Burlington Stores
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 1.33 times more return on investment than Burlington Stores. However, CNH Industrial is 1.33 times more volatile than Burlington Stores. It trades about 0.44 of its potential returns per unit of risk. Burlington Stores is currently generating about 0.41 per unit of risk. If you would invest 954.00 in CNH Industrial NV on September 14, 2024 and sell it today you would earn a total of 205.00 from holding CNH Industrial NV or generate 21.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CNH Industrial NV vs. Burlington Stores
Performance |
| Timeline |
| CNH Industrial NV |
| Burlington Stores |
CNH Industrial and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Burlington Stores
The main advantage of trading using opposite CNH Industrial and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Burlington Stores 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 Burlington Stores will offset losses from the drop in Burlington Stores' long position.| CNH Industrial vs. Burlington Stores | CNH Industrial vs. SPARTAN STORES | CNH Industrial vs. Collins Foods Limited | CNH Industrial vs. MOLSON RS BEVERAGE |
| Burlington Stores vs. Dairy Farm International | Burlington Stores vs. Ryanair Holdings plc | Burlington Stores vs. Norwegian Air Shuttle | Burlington Stores vs. Corsair Gaming |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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