Correlation Between BURLINGTON STORES and GEAR4MUSIC
Can any of the company-specific risk be diversified away by investing in both BURLINGTON STORES and GEAR4MUSIC 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 GEAR4MUSIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BURLINGTON STORES and GEAR4MUSIC LS 10, you can compare the effects of market volatilities on BURLINGTON STORES and GEAR4MUSIC 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 GEAR4MUSIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and GEAR4MUSIC.
Diversification Opportunities for BURLINGTON STORES and GEAR4MUSIC
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between BURLINGTON and GEAR4MUSIC is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and GEAR4MUSIC LS 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEAR4MUSIC LS 10 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 GEAR4MUSIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEAR4MUSIC LS 10 has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and GEAR4MUSIC go up and down completely randomly.
Pair Corralation between BURLINGTON STORES and GEAR4MUSIC
Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 1.04 times more return on investment than GEAR4MUSIC. However, BURLINGTON STORES is 1.04 times more volatile than GEAR4MUSIC LS 10. It trades about 0.29 of its potential returns per unit of risk. GEAR4MUSIC LS 10 is currently generating about 0.03 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BURLINGTON STORES vs. GEAR4MUSIC LS 10
Performance |
| Timeline |
| BURLINGTON STORES |
| GEAR4MUSIC LS 10 |
BURLINGTON STORES and GEAR4MUSIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BURLINGTON STORES and GEAR4MUSIC
The main advantage of trading using opposite BURLINGTON STORES and GEAR4MUSIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BURLINGTON STORES position performs unexpectedly, GEAR4MUSIC 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 GEAR4MUSIC will offset losses from the drop in GEAR4MUSIC'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 |
| GEAR4MUSIC vs. Virtus Investment Partners | GEAR4MUSIC vs. Shenandoah Telecommunications | GEAR4MUSIC vs. ECHO INVESTMENT ZY | GEAR4MUSIC vs. Charter Communications |
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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