Correlation Between BURLINGTON STORES and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both BURLINGTON STORES and Rheinmetall 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 Rheinmetall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BURLINGTON STORES and Rheinmetall AG, you can compare the effects of market volatilities on BURLINGTON STORES and Rheinmetall 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 Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and Rheinmetall.
Diversification Opportunities for BURLINGTON STORES and Rheinmetall
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BURLINGTON and Rheinmetall is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG 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 Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and Rheinmetall go up and down completely randomly.
Pair Corralation between BURLINGTON STORES and Rheinmetall
Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 166.98 times less return on investment than Rheinmetall. But when comparing it to its historical volatility, BURLINGTON STORES is 1.63 times less risky than Rheinmetall. It trades about 0.01 of its potential returns per unit of risk. Rheinmetall AG is currently generating about 0.52 of returns per unit of risk over similar time horizon. If you would invest 61,560 in Rheinmetall AG on October 29, 2024 and sell it today you would earn a total of 11,480 from holding Rheinmetall AG or generate 18.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BURLINGTON STORES vs. Rheinmetall AG
Performance |
| Timeline |
| BURLINGTON STORES |
| Rheinmetall AG |
BURLINGTON STORES and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BURLINGTON STORES and Rheinmetall
The main advantage of trading using opposite BURLINGTON STORES and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BURLINGTON STORES position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall's long position.| BURLINGTON STORES vs. SERI INDUSTRIAL EO | BURLINGTON STORES vs. SBM OFFSHORE | BURLINGTON STORES vs. Jacquet Metal Service | BURLINGTON STORES vs. Thai Beverage Public |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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