Correlation Between TT Electronics and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both TT Electronics 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 TT Electronics and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TT Electronics PLC and Burlington Stores, you can compare the effects of market volatilities on TT Electronics 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 TT Electronics with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of TT Electronics and Burlington Stores.
Diversification Opportunities for TT Electronics and Burlington Stores
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 7TT and Burlington is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and TT Electronics 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 TT Electronics PLC 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 TT Electronics i.e., TT Electronics and Burlington Stores go up and down completely randomly.
Pair Corralation between TT Electronics and Burlington Stores
Assuming the 90 days trading horizon TT Electronics PLC is expected to under-perform the Burlington Stores. In addition to that, TT Electronics is 1.28 times more volatile than Burlington Stores. It trades about -0.56 of its total potential returns per unit of risk. Burlington Stores is currently generating about -0.05 per unit of volatility. If you would invest 28,200 in Burlington Stores on October 25, 2024 and sell it today you would lose (400.00) from holding Burlington Stores or give up 1.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TT Electronics PLC vs. Burlington Stores
Performance |
| Timeline |
| TT Electronics PLC |
| Burlington Stores |
TT Electronics and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TT Electronics and Burlington Stores
The main advantage of trading using opposite TT Electronics and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TT Electronics 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.| TT Electronics vs. Apple Inc | TT Electronics vs. Apple Inc | TT Electronics vs. Apple Inc | TT Electronics vs. Apple Inc |
| Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc |
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 Stocks Directory module to find actively traded stocks across global markets.
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