Correlation Between BURLINGTON STORES and HORNBACH Baumarkt
Can any of the company-specific risk be diversified away by investing in both BURLINGTON STORES and HORNBACH Baumarkt 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 HORNBACH Baumarkt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BURLINGTON STORES and HORNBACH Baumarkt AG, you can compare the effects of market volatilities on BURLINGTON STORES and HORNBACH Baumarkt 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 HORNBACH Baumarkt. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and HORNBACH Baumarkt.
Diversification Opportunities for BURLINGTON STORES and HORNBACH Baumarkt
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BURLINGTON and HORNBACH is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and HORNBACH Baumarkt AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HORNBACH Baumarkt 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 HORNBACH Baumarkt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HORNBACH Baumarkt has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and HORNBACH Baumarkt go up and down completely randomly.
Pair Corralation between BURLINGTON STORES and HORNBACH Baumarkt
Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 1.03 times more return on investment than HORNBACH Baumarkt. However, BURLINGTON STORES is 1.03 times more volatile than HORNBACH Baumarkt AG. It trades about 0.16 of its potential returns per unit of risk. HORNBACH Baumarkt AG is currently generating about 0.11 per unit of risk. If you would invest 27,000 in BURLINGTON STORES on October 20, 2024 and sell it today you would earn a total of 1,000.00 from holding BURLINGTON STORES or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BURLINGTON STORES vs. HORNBACH Baumarkt AG
Performance |
| Timeline |
| BURLINGTON STORES |
| HORNBACH Baumarkt |
BURLINGTON STORES and HORNBACH Baumarkt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BURLINGTON STORES and HORNBACH Baumarkt
The main advantage of trading using opposite BURLINGTON STORES and HORNBACH Baumarkt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BURLINGTON STORES position performs unexpectedly, HORNBACH Baumarkt 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 HORNBACH Baumarkt will offset losses from the drop in HORNBACH Baumarkt's long position.| BURLINGTON STORES vs. Arrow Electronics | BURLINGTON STORES vs. TT Electronics PLC | BURLINGTON STORES vs. Benchmark Electronics | BURLINGTON STORES vs. Electronic Arts |
| HORNBACH Baumarkt vs. The Home Depot | HORNBACH Baumarkt vs. The Home Depot | HORNBACH Baumarkt vs. Floor Decor Holdings | HORNBACH Baumarkt vs. LESLIES INC DL |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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