Correlation Between BURLINGTON STORES and Vestas Wind
Can any of the company-specific risk be diversified away by investing in both BURLINGTON STORES and Vestas Wind 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 Vestas Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BURLINGTON STORES and Vestas Wind Systems, you can compare the effects of market volatilities on BURLINGTON STORES and Vestas Wind 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 Vestas Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and Vestas Wind.
Diversification Opportunities for BURLINGTON STORES and Vestas Wind
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BURLINGTON and Vestas is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and Vestas Wind Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestas Wind Systems 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 Vestas Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestas Wind Systems has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and Vestas Wind go up and down completely randomly.
Pair Corralation between BURLINGTON STORES and Vestas Wind
Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 0.99 times more return on investment than Vestas Wind. However, BURLINGTON STORES is 1.01 times less risky than Vestas Wind. It trades about 0.08 of its potential returns per unit of risk. Vestas Wind Systems is currently generating about -0.05 per unit of risk. If you would invest 14,000 in BURLINGTON STORES on August 31, 2024 and sell it today you would earn a total of 13,200 from holding BURLINGTON STORES or generate 94.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
BURLINGTON STORES vs. Vestas Wind Systems
Performance |
| Timeline |
| BURLINGTON STORES |
| Vestas Wind Systems |
BURLINGTON STORES and Vestas Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BURLINGTON STORES and Vestas Wind
The main advantage of trading using opposite BURLINGTON STORES and Vestas Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BURLINGTON STORES position performs unexpectedly, Vestas Wind 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 Vestas Wind will offset losses from the drop in Vestas Wind's long position.| BURLINGTON STORES vs. SIVERS SEMICONDUCTORS AB | BURLINGTON STORES vs. Darden Restaurants | BURLINGTON STORES vs. Reliance Steel Aluminum | BURLINGTON STORES vs. Q2M Managementberatung AG |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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