Correlation Between Burlington Stores and GigaMedia
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and GigaMedia 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 GigaMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and GigaMedia, you can compare the effects of market volatilities on Burlington Stores and GigaMedia 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 GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and GigaMedia.
Diversification Opportunities for Burlington Stores and GigaMedia
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Burlington and GigaMedia is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia 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 GigaMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigaMedia has no effect on the direction of Burlington Stores i.e., Burlington Stores and GigaMedia go up and down completely randomly.
Pair Corralation between Burlington Stores and GigaMedia
Assuming the 90 days trading horizon Burlington Stores is expected to under-perform the GigaMedia. But the stock apears to be less risky and, when comparing its historical volatility, Burlington Stores is 2.19 times less risky than GigaMedia. The stock trades about -0.08 of its potential returns per unit of risk. The GigaMedia is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 140.00 in GigaMedia on October 25, 2024 and sell it today you would earn a total of 6.00 from holding GigaMedia or generate 4.29% 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. GigaMedia
Performance |
| Timeline |
| Burlington Stores |
| GigaMedia |
Burlington Stores and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and GigaMedia
The main advantage of trading using opposite Burlington Stores and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, GigaMedia 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 GigaMedia will offset losses from the drop in GigaMedia's long position.| Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc |
| GigaMedia vs. MAGNUM MINING EXP | GigaMedia vs. Park Hotels Resorts | GigaMedia vs. Perseus Mining Limited | GigaMedia vs. Harmony Gold Mining |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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