Correlation Between Burlington Stores and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and CNH Industrial 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 CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and CNH Industrial NV, you can compare the effects of market volatilities on Burlington Stores and CNH Industrial 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 CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and CNH Industrial.
Diversification Opportunities for Burlington Stores and CNH Industrial
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Burlington and CNH is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV 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 CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of Burlington Stores i.e., Burlington Stores and CNH Industrial go up and down completely randomly.
Pair Corralation between Burlington Stores and CNH Industrial
Assuming the 90 days trading horizon Burlington Stores is expected to generate 1.04 times more return on investment than CNH Industrial. However, Burlington Stores is 1.04 times more volatile than CNH Industrial NV. It trades about 0.11 of its potential returns per unit of risk. CNH Industrial NV is currently generating about 0.04 per unit of risk. If you would invest 16,600 in Burlington Stores on September 14, 2024 and sell it today you would earn a total of 11,600 from holding Burlington Stores or generate 69.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burlington Stores vs. CNH Industrial NV
Performance |
| Timeline |
| Burlington Stores |
| CNH Industrial NV |
Burlington Stores and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and CNH Industrial
The main advantage of trading using opposite Burlington Stores and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.| Burlington Stores vs. Dairy Farm International | Burlington Stores vs. Ryanair Holdings plc | Burlington Stores vs. Norwegian Air Shuttle | Burlington Stores vs. Corsair Gaming |
| CNH Industrial vs. Burlington Stores | CNH Industrial vs. SPARTAN STORES | CNH Industrial vs. Collins Foods Limited | CNH Industrial vs. MOLSON RS BEVERAGE |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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