Correlation Between BURLINGTON STORES and News
Can any of the company-specific risk be diversified away by investing in both BURLINGTON STORES and News 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 News into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BURLINGTON STORES and News Corporation, you can compare the effects of market volatilities on BURLINGTON STORES and News 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 News. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and News.
Diversification Opportunities for BURLINGTON STORES and News
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BURLINGTON and News is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and News Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on News 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 News. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of News has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and News go up and down completely randomly.
Pair Corralation between BURLINGTON STORES and News
Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 1.09 times less return on investment than News. In addition to that, BURLINGTON STORES is 1.43 times more volatile than News Corporation. It trades about 0.04 of its total potential returns per unit of risk. News Corporation is currently generating about 0.07 per unit of volatility. If you would invest 1,755 in News Corporation on September 3, 2024 and sell it today you would earn a total of 1,185 from holding News Corporation or generate 67.52% 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. News Corp.
Performance |
| Timeline |
| BURLINGTON STORES |
| News |
BURLINGTON STORES and News Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BURLINGTON STORES and News
The main advantage of trading using opposite BURLINGTON STORES and News positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BURLINGTON STORES position performs unexpectedly, News 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 News will offset losses from the drop in News' long position.| BURLINGTON STORES vs. ULTRA CLEAN HLDGS | BURLINGTON STORES vs. Clean Energy Fuels | BURLINGTON STORES vs. COSTCO WHOLESALE CDR | BURLINGTON STORES vs. PICKN PAY STORES |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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