Correlation Between BURLINGTON STORES and United Rentals
Can any of the company-specific risk be diversified away by investing in both BURLINGTON STORES and United Rentals 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 United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BURLINGTON STORES and United Rentals, you can compare the effects of market volatilities on BURLINGTON STORES and United Rentals 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 United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and United Rentals.
Diversification Opportunities for BURLINGTON STORES and United Rentals
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BURLINGTON and United is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals 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 United Rentals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Rentals has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and United Rentals go up and down completely randomly.
Pair Corralation between BURLINGTON STORES and United Rentals
Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 0.64 times more return on investment than United Rentals. However, BURLINGTON STORES is 1.56 times less risky than United Rentals. It trades about 0.3 of its potential returns per unit of risk. United Rentals is currently generating about 0.13 per unit of risk. If you would invest 23,400 in BURLINGTON STORES on August 30, 2024 and sell it today you would earn a total of 3,800 from holding BURLINGTON STORES or generate 16.24% 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. United Rentals
Performance |
| Timeline |
| BURLINGTON STORES |
| United Rentals |
BURLINGTON STORES and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BURLINGTON STORES and United Rentals
The main advantage of trading using opposite BURLINGTON STORES and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BURLINGTON STORES position performs unexpectedly, United Rentals 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 United Rentals will offset losses from the drop in United Rentals' long position.| BURLINGTON STORES vs. AUST AGRICULTURAL | BURLINGTON STORES vs. Sanyo Chemical Industries | BURLINGTON STORES vs. AGRICULTBK HADR25 YC | BURLINGTON STORES vs. Penta Ocean Construction Co |
| United Rentals vs. Microchip Technology Incorporated | United Rentals vs. SCIENCE IN SPORT | United Rentals vs. SMA Solar Technology | United Rentals vs. COLUMBIA SPORTSWEAR |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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