Correlation Between Science Applications and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Science Applications 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 Science Applications and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Applications International and Burlington Stores, you can compare the effects of market volatilities on Science Applications 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 Science Applications with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Applications and Burlington Stores.
Diversification Opportunities for Science Applications and Burlington Stores
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Science and Burlington is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Science Applications 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 Science Applications International 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 Science Applications i.e., Science Applications and Burlington Stores go up and down completely randomly.
Pair Corralation between Science Applications and Burlington Stores
Assuming the 90 days trading horizon Science Applications is expected to generate 2.26 times less return on investment than Burlington Stores. In addition to that, Science Applications is 1.13 times more volatile than Burlington Stores. It trades about 0.05 of its total potential returns per unit of risk. Burlington Stores is currently generating about 0.12 per unit of volatility. If you would invest 21,000 in Burlington Stores on September 3, 2024 and sell it today you would earn a total of 6,200 from holding Burlington Stores or generate 29.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Science Applications Internati vs. Burlington Stores
Performance |
| Timeline |
| Science Applications |
| Burlington Stores |
Science Applications and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Applications and Burlington Stores
The main advantage of trading using opposite Science Applications and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications 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.| Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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