Correlation Between Burlington Stores and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Cardinal Health 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 Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Cardinal Health, you can compare the effects of market volatilities on Burlington Stores and Cardinal Health 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 Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Cardinal Health.
Diversification Opportunities for Burlington Stores and Cardinal Health
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Burlington and Cardinal is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health 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 Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Burlington Stores i.e., Burlington Stores and Cardinal Health go up and down completely randomly.
Pair Corralation between Burlington Stores and Cardinal Health
Assuming the 90 days trading horizon Burlington Stores is expected to generate 14.65 times less return on investment than Cardinal Health. In addition to that, Burlington Stores is 1.52 times more volatile than Cardinal Health. It trades about 0.01 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.21 per unit of volatility. If you would invest 11,145 in Cardinal Health on October 16, 2024 and sell it today you would earn a total of 520.00 from holding Cardinal Health or generate 4.67% 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. Cardinal Health
Performance |
| Timeline |
| Burlington Stores |
| Cardinal Health |
Burlington Stores and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and Cardinal Health
The main advantage of trading using opposite Burlington Stores and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Cardinal Health 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 Cardinal Health will offset losses from the drop in Cardinal Health's long position.| Burlington Stores vs. Cleanaway Waste Management | Burlington Stores vs. Media and Games | Burlington Stores vs. Waste Management | Burlington Stores vs. Scientific Games |
| Cardinal Health vs. Khiron Life Sciences | Cardinal Health vs. AEON STORES | Cardinal Health vs. Burlington Stores | Cardinal Health vs. H2O Retailing |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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