Correlation Between Burlington Stores and EBay
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and EBay 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 EBay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and eBay Inc, you can compare the effects of market volatilities on Burlington Stores and EBay 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 EBay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and EBay.
Diversification Opportunities for Burlington Stores and EBay
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Burlington and EBay is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc 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 EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of Burlington Stores i.e., Burlington Stores and EBay go up and down completely randomly.
Pair Corralation between Burlington Stores and EBay
Assuming the 90 days trading horizon Burlington Stores is expected to generate 1.56 times more return on investment than EBay. However, Burlington Stores is 1.56 times more volatile than eBay Inc. It trades about 0.38 of its potential returns per unit of risk. eBay Inc is currently generating about 0.31 per unit of risk. If you would invest 22,600 in Burlington Stores on September 5, 2024 and sell it today you would earn a total of 4,200 from holding Burlington Stores or generate 18.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Burlington Stores vs. eBay Inc
Performance |
| Timeline |
| Burlington Stores |
| eBay Inc |
Burlington Stores and EBay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and EBay
The main advantage of trading using opposite Burlington Stores and EBay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, EBay 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 EBay will offset losses from the drop in EBay's long position.| Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc |
| EBay vs. BURLINGTON STORES | EBay vs. Strategic Investments AS | EBay vs. Virtus Investment Partners | EBay vs. Burlington Stores |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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