Correlation Between Burlington Stores and BANK RAKYAT
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and BANK RAKYAT 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 BANK RAKYAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and BANK RAKYAT IND, you can compare the effects of market volatilities on Burlington Stores and BANK RAKYAT 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 BANK RAKYAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and BANK RAKYAT.
Diversification Opportunities for Burlington Stores and BANK RAKYAT
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Burlington and BANK is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and BANK RAKYAT IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK RAKYAT IND 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 BANK RAKYAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK RAKYAT IND has no effect on the direction of Burlington Stores i.e., Burlington Stores and BANK RAKYAT go up and down completely randomly.
Pair Corralation between Burlington Stores and BANK RAKYAT
Assuming the 90 days trading horizon Burlington Stores is expected to generate 0.92 times more return on investment than BANK RAKYAT. However, Burlington Stores is 1.09 times less risky than BANK RAKYAT. It trades about 0.36 of its potential returns per unit of risk. BANK RAKYAT IND is currently generating about -0.21 per unit of risk. If you would invest 24,600 in Burlington Stores on September 13, 2024 and sell it today you would earn a total of 3,000 from holding Burlington Stores or generate 12.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burlington Stores vs. BANK RAKYAT IND
Performance |
| Timeline |
| Burlington Stores |
| BANK RAKYAT IND |
Burlington Stores and BANK RAKYAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and BANK RAKYAT
The main advantage of trading using opposite Burlington Stores and BANK RAKYAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, BANK RAKYAT 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 BANK RAKYAT will offset losses from the drop in BANK RAKYAT's long position.| Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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