Correlation Between Burlington Stores and Ming Le
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Ming Le 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 Ming Le into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Ming Le Sports, you can compare the effects of market volatilities on Burlington Stores and Ming Le 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 Ming Le. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Ming Le.
Diversification Opportunities for Burlington Stores and Ming Le
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Burlington and Ming is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Ming Le Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ming Le Sports 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 Ming Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ming Le Sports has no effect on the direction of Burlington Stores i.e., Burlington Stores and Ming Le go up and down completely randomly.
Pair Corralation between Burlington Stores and Ming Le
Assuming the 90 days trading horizon Burlington Stores is expected to generate 1.1 times more return on investment than Ming Le. However, Burlington Stores is 1.1 times more volatile than Ming Le Sports. It trades about 0.04 of its potential returns per unit of risk. Ming Le Sports is currently generating about 0.02 per unit of risk. If you would invest 18,500 in Burlington Stores on September 3, 2024 and sell it today you would earn a total of 8,700 from holding Burlington Stores or generate 47.03% 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. Ming Le Sports
Performance |
| Timeline |
| Burlington Stores |
| Ming Le Sports |
Burlington Stores and Ming Le Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and Ming Le
The main advantage of trading using opposite Burlington Stores and Ming Le positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Ming Le 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 Ming Le will offset losses from the drop in Ming Le's long position.| Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc |
| Ming Le vs. Sqs Software Quality | Ming Le vs. Burlington Stores | Ming Le vs. VITEC SOFTWARE GROUP | Ming Le vs. Take Two Interactive Software |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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