Correlation Between AM EAGLE and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both AM EAGLE 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 AM EAGLE and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AM EAGLE OUTFITTERS and Burlington Stores, you can compare the effects of market volatilities on AM EAGLE 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 AM EAGLE with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of AM EAGLE and Burlington Stores.
Diversification Opportunities for AM EAGLE and Burlington Stores
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AFG and Burlington is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and AM EAGLE 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 AM EAGLE OUTFITTERS 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 AM EAGLE i.e., AM EAGLE and Burlington Stores go up and down completely randomly.
Pair Corralation between AM EAGLE and Burlington Stores
Assuming the 90 days trading horizon AM EAGLE is expected to generate 2.05 times less return on investment than Burlington Stores. In addition to that, AM EAGLE is 1.07 times more volatile than Burlington Stores. It trades about 0.04 of its total potential returns per unit of risk. Burlington Stores is currently generating about 0.08 per unit of volatility. If you would invest 15,800 in Burlington Stores on September 12, 2024 and sell it today you would earn a total of 11,600 from holding Burlington Stores or generate 73.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AM EAGLE OUTFITTERS vs. Burlington Stores
Performance |
| Timeline |
| AM EAGLE OUTFITTERS |
| Burlington Stores |
AM EAGLE and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AM EAGLE and Burlington Stores
The main advantage of trading using opposite AM EAGLE and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AM EAGLE 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.The idea behind AM EAGLE OUTFITTERS and Burlington Stores pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Burlington Stores vs. Amkor Technology | Burlington Stores vs. RCM TECHNOLOGIES | Burlington Stores vs. Samsung Electronics Co | Burlington Stores vs. AM EAGLE OUTFITTERS |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |