Correlation Between BURLINGTON STORES and Catalent
Can any of the company-specific risk be diversified away by investing in both BURLINGTON STORES and Catalent 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 BURLINGTON STORES and Catalent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BURLINGTON STORES and Catalent, you can compare the effects of market volatilities on BURLINGTON STORES and Catalent 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 BURLINGTON STORES with a short position of Catalent. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and Catalent.
Diversification Opportunities for BURLINGTON STORES and Catalent
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BURLINGTON and Catalent is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent and BURLINGTON STORES 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 BURLINGTON STORES are associated (or correlated) with Catalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalent has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and Catalent go up and down completely randomly.
Pair Corralation between BURLINGTON STORES and Catalent
Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 6.08 times more return on investment than Catalent. However, BURLINGTON STORES is 6.08 times more volatile than Catalent. It trades about 0.04 of its potential returns per unit of risk. Catalent is currently generating about -0.5 per unit of risk. If you would invest 27,400 in BURLINGTON STORES on October 15, 2024 and sell it today you would earn a total of 200.00 from holding BURLINGTON STORES or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 25.0% |
| Values | Daily Returns |
BURLINGTON STORES vs. Catalent
Performance |
| Timeline |
| BURLINGTON STORES |
| Catalent |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
BURLINGTON STORES and Catalent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BURLINGTON STORES and Catalent
The main advantage of trading using opposite BURLINGTON STORES and Catalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BURLINGTON STORES position performs unexpectedly, Catalent 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 Catalent will offset losses from the drop in Catalent's long position.| BURLINGTON STORES vs. Beta Systems Software | BURLINGTON STORES vs. UPDATE SOFTWARE | BURLINGTON STORES vs. URBAN OUTFITTERS | BURLINGTON STORES vs. Aristocrat Leisure Limited |
| Catalent vs. BURLINGTON STORES | Catalent vs. Ebro Foods SA | Catalent vs. RETAIL FOOD GROUP | Catalent vs. BJs Wholesale Club |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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