Correlation Between BURLINGTON STORES and JAPAN TOBACCO
Can any of the company-specific risk be diversified away by investing in both BURLINGTON STORES and JAPAN TOBACCO 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 JAPAN TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BURLINGTON STORES and JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on BURLINGTON STORES and JAPAN TOBACCO 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 JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and JAPAN TOBACCO.
Diversification Opportunities for BURLINGTON STORES and JAPAN TOBACCO
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BURLINGTON and JAPAN is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and JAPAN TOBACCO UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN TOBACCO UNSPADR12 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 JAPAN TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN TOBACCO UNSPADR12 has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and JAPAN TOBACCO go up and down completely randomly.
Pair Corralation between BURLINGTON STORES and JAPAN TOBACCO
Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 1.41 times more return on investment than JAPAN TOBACCO. However, BURLINGTON STORES is 1.41 times more volatile than JAPAN TOBACCO UNSPADR12. It trades about 0.18 of its potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about 0.05 per unit of risk. If you would invest 23,400 in BURLINGTON STORES on September 22, 2024 and sell it today you would earn a total of 3,600 from holding BURLINGTON STORES or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BURLINGTON STORES vs. JAPAN TOBACCO UNSPADR12
Performance |
| Timeline |
| BURLINGTON STORES |
| JAPAN TOBACCO UNSPADR12 |
BURLINGTON STORES and JAPAN TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BURLINGTON STORES and JAPAN TOBACCO
The main advantage of trading using opposite BURLINGTON STORES and JAPAN TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BURLINGTON STORES position performs unexpectedly, JAPAN TOBACCO 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 JAPAN TOBACCO will offset losses from the drop in JAPAN TOBACCO's long position.| BURLINGTON STORES vs. Apple Inc | BURLINGTON STORES vs. Apple Inc | BURLINGTON STORES vs. Apple Inc | BURLINGTON STORES vs. Apple Inc |
| JAPAN TOBACCO vs. TYSON FOODS A | JAPAN TOBACCO vs. BURLINGTON STORES | JAPAN TOBACCO vs. Marie Brizard Wine | JAPAN TOBACCO vs. Food Life Companies |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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