Correlation Between Burlington Stores and CAREER EDUCATION
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and CAREER EDUCATION 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 CAREER EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and CAREER EDUCATION, you can compare the effects of market volatilities on Burlington Stores and CAREER EDUCATION 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 CAREER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and CAREER EDUCATION.
Diversification Opportunities for Burlington Stores and CAREER EDUCATION
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Burlington and CAREER is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and CAREER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAREER EDUCATION 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 CAREER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAREER EDUCATION has no effect on the direction of Burlington Stores i.e., Burlington Stores and CAREER EDUCATION go up and down completely randomly.
Pair Corralation between Burlington Stores and CAREER EDUCATION
Assuming the 90 days trading horizon Burlington Stores is expected to generate 1.45 times less return on investment than CAREER EDUCATION. But when comparing it to its historical volatility, Burlington Stores is 1.8 times less risky than CAREER EDUCATION. It trades about 0.38 of its potential returns per unit of risk. CAREER EDUCATION is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,000 in CAREER EDUCATION on September 4, 2024 and sell it today you would earn a total of 540.00 from holding CAREER EDUCATION or generate 27.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burlington Stores vs. CAREER EDUCATION
Performance |
| Timeline |
| Burlington Stores |
| CAREER EDUCATION |
Burlington Stores and CAREER EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and CAREER EDUCATION
The main advantage of trading using opposite Burlington Stores and CAREER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, CAREER EDUCATION 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 CAREER EDUCATION will offset losses from the drop in CAREER EDUCATION's long position.| Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc |
| CAREER EDUCATION vs. TOTAL GABON | CAREER EDUCATION vs. Walgreens Boots Alliance | CAREER EDUCATION vs. Peak Resources Limited |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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