Correlation Between BURLINGTON STORES and National Beverage
Can any of the company-specific risk be diversified away by investing in both BURLINGTON STORES and National Beverage 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 National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BURLINGTON STORES and National Beverage Corp, you can compare the effects of market volatilities on BURLINGTON STORES and National Beverage 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 National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and National Beverage.
Diversification Opportunities for BURLINGTON STORES and National Beverage
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BURLINGTON and National is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp 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 National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and National Beverage go up and down completely randomly.
Pair Corralation between BURLINGTON STORES and National Beverage
Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 1.04 times more return on investment than National Beverage. However, BURLINGTON STORES is 1.04 times more volatile than National Beverage Corp. It trades about 0.18 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.15 per unit of risk. If you would invest 24,400 in BURLINGTON STORES on October 12, 2024 and sell it today you would earn a total of 3,200 from holding BURLINGTON STORES or generate 13.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.5% |
| Values | Daily Returns |
BURLINGTON STORES vs. National Beverage Corp
Performance |
| Timeline |
| BURLINGTON STORES |
| National Beverage Corp |
BURLINGTON STORES and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BURLINGTON STORES and National Beverage
The main advantage of trading using opposite BURLINGTON STORES and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BURLINGTON STORES position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| BURLINGTON STORES vs. Hisense Home Appliances | BURLINGTON STORES vs. Keck Seng Investments | BURLINGTON STORES vs. AOYAMA TRADING | BURLINGTON STORES vs. Addus HomeCare |
| National Beverage vs. BURLINGTON STORES | National Beverage vs. Calibre Mining Corp | National Beverage vs. GREENX METALS LTD | National Beverage vs. ADRIATIC METALS LS 013355 |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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