Correlation Between Burlington Stores and Entravision Communications
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Entravision Communications 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 Entravision Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Entravision Communications, you can compare the effects of market volatilities on Burlington Stores and Entravision Communications 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 Entravision Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Entravision Communications.
Diversification Opportunities for Burlington Stores and Entravision Communications
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Burlington and Entravision is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications 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 Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of Burlington Stores i.e., Burlington Stores and Entravision Communications go up and down completely randomly.
Pair Corralation between Burlington Stores and Entravision Communications
Assuming the 90 days trading horizon Burlington Stores is expected to generate 0.26 times more return on investment than Entravision Communications. However, Burlington Stores is 3.8 times less risky than Entravision Communications. It trades about 0.11 of its potential returns per unit of risk. Entravision Communications is currently generating about -0.04 per unit of risk. If you would invest 27,200 in Burlington Stores on October 22, 2024 and sell it today you would earn a total of 800.00 from holding Burlington Stores or generate 2.94% 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. Entravision Communications
Performance |
| Timeline |
| Burlington Stores |
| Entravision Communications |
Burlington Stores and Entravision Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and Entravision Communications
The main advantage of trading using opposite Burlington Stores and Entravision Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Entravision Communications 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 Entravision Communications will offset losses from the drop in Entravision Communications' long position.| Burlington Stores vs. YATRA ONLINE DL 0001 | Burlington Stores vs. SALESFORCE INC CDR | Burlington Stores vs. CENTURIA OFFICE REIT | Burlington Stores vs. Entravision Communications |
| Entravision Communications vs. Burlington Stores | Entravision Communications vs. Fair Isaac Corp | Entravision Communications vs. CHINA SOUTHN AIR H | Entravision Communications vs. Westinghouse Air Brake |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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