Correlation Between Burlington Stores and HCA Healthcare
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and HCA Healthcare 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 HCA Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and HCA Healthcare, you can compare the effects of market volatilities on Burlington Stores and HCA Healthcare 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 HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and HCA Healthcare.
Diversification Opportunities for Burlington Stores and HCA Healthcare
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Burlington and HCA is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare 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 HCA Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Healthcare has no effect on the direction of Burlington Stores i.e., Burlington Stores and HCA Healthcare go up and down completely randomly.
Pair Corralation between Burlington Stores and HCA Healthcare
Assuming the 90 days trading horizon Burlington Stores is expected to generate 1.79 times more return on investment than HCA Healthcare. However, Burlington Stores is 1.79 times more volatile than HCA Healthcare. It trades about 0.04 of its potential returns per unit of risk. HCA Healthcare is currently generating about 0.06 per unit of risk. If you would invest 18,500 in Burlington Stores on September 2, 2024 and sell it today you would earn a total of 8,700 from holding Burlington Stores or generate 47.03% 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. HCA Healthcare
Performance |
| Timeline |
| Burlington Stores |
| HCA Healthcare |
Burlington Stores and HCA Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and HCA Healthcare
The main advantage of trading using opposite Burlington Stores and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, HCA Healthcare 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 HCA Healthcare will offset losses from the drop in HCA Healthcare's long position.| Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc |
| HCA Healthcare vs. Chunghwa Telecom Co | HCA Healthcare vs. METHODE ELECTRONICS | HCA Healthcare vs. Spirent Communications plc | HCA Healthcare vs. KIMBALL ELECTRONICS |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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