Correlation Between Apple and BURLINGTON STORES
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and BURLINGTON STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and BURLINGTON STORES, you can compare the effects of market volatilities on Apple 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 Apple with a short position of BURLINGTON STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and BURLINGTON STORES.
Diversification Opportunities for Apple and BURLINGTON STORES
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and BURLINGTON is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and BURLINGTON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BURLINGTON STORES and Apple 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 Apple Inc 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 Apple i.e., Apple and BURLINGTON STORES go up and down completely randomly.
Pair Corralation between Apple and BURLINGTON STORES
Assuming the 90 days trading horizon Apple Inc is expected to under-perform the BURLINGTON STORES. In addition to that, Apple is 1.66 times more volatile than BURLINGTON STORES. It trades about -0.08 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 27,400 in BURLINGTON STORES on November 3, 2024 and sell it today you would earn a total of 800.00 from holding BURLINGTON STORES or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. BURLINGTON STORES
Performance |
| Timeline |
| Apple Inc |
| BURLINGTON STORES |
Apple and BURLINGTON STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and BURLINGTON STORES
The main advantage of trading using opposite Apple and BURLINGTON STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. GRIFFIN MINING LTD | Apple vs. MINCO SILVER | Apple vs. GALENA MINING LTD | Apple vs. Kingdee International Software |
| BURLINGTON STORES vs. ALBIS LEASING AG | BURLINGTON STORES vs. HK Electric Investments | BURLINGTON STORES vs. SEI INVESTMENTS | BURLINGTON STORES vs. Guangdong Investment Limited |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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