Correlation Between VARIOUS EATERIES and BURLINGTON STORES
Can any of the company-specific risk be diversified away by investing in both VARIOUS EATERIES 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 VARIOUS EATERIES and BURLINGTON STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VARIOUS EATERIES LS and BURLINGTON STORES, you can compare the effects of market volatilities on VARIOUS EATERIES 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 VARIOUS EATERIES with a short position of BURLINGTON STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of VARIOUS EATERIES and BURLINGTON STORES.
Diversification Opportunities for VARIOUS EATERIES and BURLINGTON STORES
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between VARIOUS and BURLINGTON is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding VARIOUS EATERIES LS and BURLINGTON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BURLINGTON STORES and VARIOUS EATERIES 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 VARIOUS EATERIES LS 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 VARIOUS EATERIES i.e., VARIOUS EATERIES and BURLINGTON STORES go up and down completely randomly.
Pair Corralation between VARIOUS EATERIES and BURLINGTON STORES
Assuming the 90 days horizon VARIOUS EATERIES is expected to generate 2.96 times less return on investment than BURLINGTON STORES. But when comparing it to its historical volatility, VARIOUS EATERIES LS is 2.18 times less risky than BURLINGTON STORES. It trades about 0.21 of its potential returns per unit of risk. BURLINGTON STORES is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 23,600 in BURLINGTON STORES on September 1, 2024 and sell it today you would earn a total of 3,600 from holding BURLINGTON STORES or generate 15.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VARIOUS EATERIES LS vs. BURLINGTON STORES
Performance |
| Timeline |
| VARIOUS EATERIES |
| BURLINGTON STORES |
VARIOUS EATERIES and BURLINGTON STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VARIOUS EATERIES and BURLINGTON STORES
The main advantage of trading using opposite VARIOUS EATERIES and BURLINGTON STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VARIOUS EATERIES 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's long position.| VARIOUS EATERIES vs. USWE SPORTS AB | VARIOUS EATERIES vs. Fukuyama Transporting Co | VARIOUS EATERIES vs. Transport International Holdings | VARIOUS EATERIES vs. NetSol Technologies |
| BURLINGTON STORES vs. SIVERS SEMICONDUCTORS AB | BURLINGTON STORES vs. Darden Restaurants | BURLINGTON STORES vs. Reliance Steel Aluminum | BURLINGTON STORES vs. Q2M Managementberatung AG |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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