Correlation Between Brilliant Earth and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Brilliant Earth 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 Brilliant Earth and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brilliant Earth Group and Burlington Stores, you can compare the effects of market volatilities on Brilliant Earth 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 Brilliant Earth with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brilliant Earth and Burlington Stores.
Diversification Opportunities for Brilliant Earth and Burlington Stores
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Brilliant and Burlington is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Brilliant Earth Group and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Brilliant Earth 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 Brilliant Earth Group 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 Brilliant Earth i.e., Brilliant Earth and Burlington Stores go up and down completely randomly.
Pair Corralation between Brilliant Earth and Burlington Stores
Given the investment horizon of 90 days Brilliant Earth Group is expected to under-perform the Burlington Stores. In addition to that, Brilliant Earth is 1.59 times more volatile than Burlington Stores. It trades about -0.03 of its total potential returns per unit of risk. Burlington Stores is currently generating about 0.04 per unit of volatility. If you would invest 19,667 in Burlington Stores on September 3, 2024 and sell it today you would earn a total of 8,521 from holding Burlington Stores or generate 43.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brilliant Earth Group vs. Burlington Stores
Performance |
| Timeline |
| Brilliant Earth Group |
| Burlington Stores |
Brilliant Earth and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brilliant Earth and Burlington Stores
The main advantage of trading using opposite Brilliant Earth and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brilliant Earth 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.| Brilliant Earth vs. Capri Holdings | Brilliant Earth vs. Movado Group | Brilliant Earth vs. Tapestry | Brilliant Earth vs. TheRealReal |
| Burlington Stores vs. The TJX Companies | Burlington Stores vs. Guess Inc | Burlington Stores vs. Urban Outfitters | Burlington Stores vs. Childrens Place |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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