Correlation Between Burlington Stores and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Summit Hotel 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 Summit Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Summit Hotel Properties, you can compare the effects of market volatilities on Burlington Stores and Summit Hotel 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 Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Summit Hotel.
Diversification Opportunities for Burlington Stores and Summit Hotel
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Burlington and Summit is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Summit Hotel Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Hotel Properties 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 Summit Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Hotel Properties has no effect on the direction of Burlington Stores i.e., Burlington Stores and Summit Hotel go up and down completely randomly.
Pair Corralation between Burlington Stores and Summit Hotel
Assuming the 90 days trading horizon Burlington Stores is expected to generate 1.12 times more return on investment than Summit Hotel. However, Burlington Stores is 1.12 times more volatile than Summit Hotel Properties. It trades about 0.04 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about 0.0 per unit of risk. If you would invest 20,600 in Burlington Stores on October 18, 2024 and sell it today you would earn a total of 7,000 from holding Burlington Stores or generate 33.98% 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. Summit Hotel Properties
Performance |
| Timeline |
| Burlington Stores |
| Summit Hotel Properties |
Burlington Stores and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and Summit Hotel
The main advantage of trading using opposite Burlington Stores and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Summit Hotel 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 Summit Hotel will offset losses from the drop in Summit Hotel's long position.| Burlington Stores vs. COFCO Joycome Foods | Burlington Stores vs. SENECA FOODS A | Burlington Stores vs. DELTA AIR LINES | Burlington Stores vs. PLANT VEDA FOODS |
| Summit Hotel vs. Highlight Communications AG | Summit Hotel vs. MOBILE FACTORY INC | Summit Hotel vs. EAT WELL INVESTMENT | Summit Hotel vs. New Residential Investment |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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