Correlation Between Burlington Stores and Experian Plc
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Experian Plc 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 Experian Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Experian plc, you can compare the effects of market volatilities on Burlington Stores and Experian Plc 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 Experian Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Experian Plc.
Diversification Opportunities for Burlington Stores and Experian Plc
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Burlington and Experian is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Experian plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Experian plc 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 Experian Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Experian plc has no effect on the direction of Burlington Stores i.e., Burlington Stores and Experian Plc go up and down completely randomly.
Pair Corralation between Burlington Stores and Experian Plc
Assuming the 90 days trading horizon Burlington Stores is expected to generate 7.72 times less return on investment than Experian Plc. But when comparing it to its historical volatility, Burlington Stores is 1.2 times less risky than Experian Plc. It trades about 0.05 of its potential returns per unit of risk. Experian plc is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 4,160 in Experian plc on November 6, 2024 and sell it today you would earn a total of 580.00 from holding Experian plc or generate 13.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Burlington Stores vs. Experian plc
Performance |
| Timeline |
| Burlington Stores |
| Experian plc |
Burlington Stores and Experian Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and Experian Plc
The main advantage of trading using opposite Burlington Stores and Experian Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Experian Plc 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 Experian Plc will offset losses from the drop in Experian Plc's long position.| Burlington Stores vs. Solstad Offshore ASA | Burlington Stores vs. LAir Liquide SA | Burlington Stores vs. DELTA AIR LINES | Burlington Stores vs. CSSC Offshore Marine |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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