Correlation Between Postal Savings and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Postal Savings 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 Postal Savings and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Postal Savings Bank and Burlington Stores, you can compare the effects of market volatilities on Postal Savings 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 Postal Savings with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postal Savings and Burlington Stores.
Diversification Opportunities for Postal Savings and Burlington Stores
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Postal and Burlington is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Postal Savings Bank and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Postal Savings 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 Postal Savings Bank 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 Postal Savings i.e., Postal Savings and Burlington Stores go up and down completely randomly.
Pair Corralation between Postal Savings and Burlington Stores
Assuming the 90 days horizon Postal Savings is expected to generate 44.24 times less return on investment than Burlington Stores. But when comparing it to its historical volatility, Postal Savings Bank is 1.29 times less risky than Burlington Stores. It trades about 0.01 of its potential returns per unit of risk. Burlington Stores is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 23,400 in Burlington Stores on August 29, 2024 and sell it today you would earn a total of 4,000 from holding Burlington Stores or generate 17.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postal Savings Bank vs. Burlington Stores
Performance |
| Timeline |
| Postal Savings Bank |
| Burlington Stores |
Postal Savings and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postal Savings and Burlington Stores
The main advantage of trading using opposite Postal Savings and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Savings 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.| Postal Savings vs. Deutsche Bank Aktiengesellschaft | Postal Savings vs. Superior Plus Corp | Postal Savings vs. NMI Holdings | Postal Savings vs. Origin Agritech |
| Burlington Stores vs. Laureate Education | Burlington Stores vs. Postal Savings Bank | Burlington Stores vs. DeVry Education Group | Burlington Stores vs. IDP EDUCATION LTD |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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