Correlation Between Burlington Stores and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Treasury Wine 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 Treasury Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Treasury Wine Estates, you can compare the effects of market volatilities on Burlington Stores and Treasury Wine 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 Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Treasury Wine.
Diversification Opportunities for Burlington Stores and Treasury Wine
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Burlington and Treasury is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of Burlington Stores i.e., Burlington Stores and Treasury Wine go up and down completely randomly.
Pair Corralation between Burlington Stores and Treasury Wine
Assuming the 90 days trading horizon Burlington Stores is expected to generate 1.14 times more return on investment than Treasury Wine. However, Burlington Stores is 1.14 times more volatile than Treasury Wine Estates. It trades about 0.13 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about 0.01 per unit of risk. If you would invest 18,400 in Burlington Stores on August 25, 2024 and sell it today you would earn a total of 7,600 from holding Burlington Stores or generate 41.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.24% |
| Values | Daily Returns |
Burlington Stores vs. Treasury Wine Estates
Performance |
| Timeline |
| Burlington Stores |
| Treasury Wine Estates |
Burlington Stores and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and Treasury Wine
The main advantage of trading using opposite Burlington Stores and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Treasury Wine 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 Treasury Wine will offset losses from the drop in Treasury Wine's long position.| Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc |
| Treasury Wine vs. Scientific Games | Treasury Wine vs. Rogers Communications | Treasury Wine vs. China Communications Services | Treasury Wine vs. QIIWI GAMES AB |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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