Correlation Between BURLINGTON STORES and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both BURLINGTON STORES and Fast Retailing 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 Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BURLINGTON STORES and Fast Retailing Co, you can compare the effects of market volatilities on BURLINGTON STORES and Fast Retailing 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 Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and Fast Retailing.
Diversification Opportunities for BURLINGTON STORES and Fast Retailing
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BURLINGTON and Fast is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and Fast Retailing go up and down completely randomly.
Pair Corralation between BURLINGTON STORES and Fast Retailing
Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 1.25 times more return on investment than Fast Retailing. However, BURLINGTON STORES is 1.25 times more volatile than Fast Retailing Co. It trades about 0.29 of its potential returns per unit of risk. Fast Retailing Co is currently generating about 0.2 per unit of risk. If you would invest 23,600 in BURLINGTON STORES on September 1, 2024 and sell it today you would earn a total of 3,600 from holding BURLINGTON STORES or generate 15.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BURLINGTON STORES vs. Fast Retailing Co
Performance |
| Timeline |
| BURLINGTON STORES |
| Fast Retailing |
BURLINGTON STORES and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BURLINGTON STORES and Fast Retailing
The main advantage of trading using opposite BURLINGTON STORES and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BURLINGTON STORES position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing's long position.| BURLINGTON STORES vs. SIVERS SEMICONDUCTORS AB | BURLINGTON STORES vs. Darden Restaurants | BURLINGTON STORES vs. Reliance Steel Aluminum | BURLINGTON STORES vs. Q2M Managementberatung AG |
| Fast Retailing vs. SIVERS SEMICONDUCTORS AB | Fast Retailing vs. Darden Restaurants | Fast Retailing vs. Reliance Steel Aluminum | Fast Retailing vs. Q2M Managementberatung AG |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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