Correlation Between BURLINGTON STORES and Power Assets
Can any of the company-specific risk be diversified away by investing in both BURLINGTON STORES and Power Assets 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 Power Assets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BURLINGTON STORES and Power Assets Holdings, you can compare the effects of market volatilities on BURLINGTON STORES and Power Assets 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 Power Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and Power Assets.
Diversification Opportunities for BURLINGTON STORES and Power Assets
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BURLINGTON and Power is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and Power Assets Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Assets Holdings 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 Power Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Assets Holdings has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and Power Assets go up and down completely randomly.
Pair Corralation between BURLINGTON STORES and Power Assets
Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 1.07 times more return on investment than Power Assets. However, BURLINGTON STORES is 1.07 times more volatile than Power Assets Holdings. It trades about 0.12 of its potential returns per unit of risk. Power Assets Holdings is currently generating about -0.22 per unit of risk. If you would invest 27,400 in BURLINGTON STORES on November 3, 2024 and sell it today you would earn a total of 800.00 from holding BURLINGTON STORES or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BURLINGTON STORES vs. Power Assets Holdings
Performance |
| Timeline |
| BURLINGTON STORES |
| Power Assets Holdings |
BURLINGTON STORES and Power Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BURLINGTON STORES and Power Assets
The main advantage of trading using opposite BURLINGTON STORES and Power Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BURLINGTON STORES position performs unexpectedly, Power Assets 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 Power Assets will offset losses from the drop in Power Assets' long position.| BURLINGTON STORES vs. ALBIS LEASING AG | BURLINGTON STORES vs. HK Electric Investments | BURLINGTON STORES vs. SEI INVESTMENTS | BURLINGTON STORES vs. Guangdong Investment Limited |
| Power Assets vs. BANKINTER ADR 2007 | Power Assets vs. BANK OF CHINA | Power Assets vs. CLOVER HEALTH INV | Power Assets vs. Acadia Healthcare |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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