Correlation Between BURLINGTON STORES and Heidelberg Materials
Can any of the company-specific risk be diversified away by investing in both BURLINGTON STORES and Heidelberg Materials 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 Heidelberg Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BURLINGTON STORES and Heidelberg Materials AG, you can compare the effects of market volatilities on BURLINGTON STORES and Heidelberg Materials 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 Heidelberg Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and Heidelberg Materials.
Diversification Opportunities for BURLINGTON STORES and Heidelberg Materials
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BURLINGTON and Heidelberg is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and Heidelberg Materials AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heidelberg Materials 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 Heidelberg Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heidelberg Materials has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and Heidelberg Materials go up and down completely randomly.
Pair Corralation between BURLINGTON STORES and Heidelberg Materials
Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 1.2 times more return on investment than Heidelberg Materials. However, BURLINGTON STORES is 1.2 times more volatile than Heidelberg Materials AG. It trades about 0.14 of its potential returns per unit of risk. Heidelberg Materials AG is currently generating about 0.08 per unit of risk. If you would invest 25,400 in BURLINGTON STORES on October 16, 2024 and sell it today you would earn a total of 2,400 from holding BURLINGTON STORES or generate 9.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BURLINGTON STORES vs. Heidelberg Materials AG
Performance |
| Timeline |
| BURLINGTON STORES |
| Heidelberg Materials |
BURLINGTON STORES and Heidelberg Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BURLINGTON STORES and Heidelberg Materials
The main advantage of trading using opposite BURLINGTON STORES and Heidelberg Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BURLINGTON STORES position performs unexpectedly, Heidelberg Materials 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 Heidelberg Materials will offset losses from the drop in Heidelberg Materials' long position.| BURLINGTON STORES vs. Hemisphere Energy Corp | BURLINGTON STORES vs. MagnaChip Semiconductor Corp | BURLINGTON STORES vs. CRISPR Therapeutics AG | BURLINGTON STORES vs. GEAR4MUSIC LS 10 |
| Heidelberg Materials vs. Scandinavian Tobacco Group | Heidelberg Materials vs. BURLINGTON STORES | Heidelberg Materials vs. Burlington Stores | Heidelberg Materials vs. UNITED RENTALS |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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