Correlation Between BURLINGTON STORES and SPARTAN STORES
Can any of the company-specific risk be diversified away by investing in both BURLINGTON STORES and SPARTAN STORES 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 SPARTAN STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BURLINGTON STORES and SPARTAN STORES, you can compare the effects of market volatilities on BURLINGTON STORES and SPARTAN STORES 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 SPARTAN STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and SPARTAN STORES.
Diversification Opportunities for BURLINGTON STORES and SPARTAN STORES
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BURLINGTON and SPARTAN is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and SPARTAN STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTAN STORES 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 SPARTAN STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPARTAN STORES has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and SPARTAN STORES go up and down completely randomly.
Pair Corralation between BURLINGTON STORES and SPARTAN STORES
Assuming the 90 days trading horizon BURLINGTON STORES is expected to under-perform the SPARTAN STORES. In addition to that, BURLINGTON STORES is 1.13 times more volatile than SPARTAN STORES. It trades about -0.15 of its total potential returns per unit of risk. SPARTAN STORES is currently generating about 0.05 per unit of volatility. If you would invest 1,780 in SPARTAN STORES on December 13, 2024 and sell it today you would earn a total of 40.00 from holding SPARTAN STORES or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BURLINGTON STORES vs. SPARTAN STORES
Performance |
| Timeline |
| BURLINGTON STORES |
| SPARTAN STORES |
BURLINGTON STORES and SPARTAN STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BURLINGTON STORES and SPARTAN STORES
The main advantage of trading using opposite BURLINGTON STORES and SPARTAN STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BURLINGTON STORES position performs unexpectedly, SPARTAN STORES 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 SPARTAN STORES will offset losses from the drop in SPARTAN STORES's long position.| BURLINGTON STORES vs. KOBE STEEL LTD | ||
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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