Correlation Between Burlington Stores and Sterling Construction
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Sterling Construction 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 Sterling Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Sterling Construction, you can compare the effects of market volatilities on Burlington Stores and Sterling Construction 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 Sterling Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Sterling Construction.
Diversification Opportunities for Burlington Stores and Sterling Construction
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Burlington and Sterling is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction 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 Sterling Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Construction has no effect on the direction of Burlington Stores i.e., Burlington Stores and Sterling Construction go up and down completely randomly.
Pair Corralation between Burlington Stores and Sterling Construction
Assuming the 90 days trading horizon Burlington Stores is expected to generate 7.32 times less return on investment than Sterling Construction. But when comparing it to its historical volatility, Burlington Stores is 2.19 times less risky than Sterling Construction. It trades about 0.06 of its potential returns per unit of risk. Sterling Construction is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 16,695 in Sterling Construction on October 24, 2024 and sell it today you would earn a total of 1,990 from holding Sterling Construction or generate 11.92% 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. Sterling Construction
Performance |
| Timeline |
| Burlington Stores |
| Sterling Construction |
Burlington Stores and Sterling Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and Sterling Construction
The main advantage of trading using opposite Burlington Stores and Sterling Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Sterling Construction 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 Sterling Construction will offset losses from the drop in Sterling Construction's long position.| Burlington Stores vs. Madison Square Garden | Burlington Stores vs. NTG Nordic Transport | Burlington Stores vs. DICKS Sporting Goods | Burlington Stores vs. SPORTING |
| Sterling Construction vs. BURLINGTON STORES | Sterling Construction vs. Tencent Music Entertainment | Sterling Construction vs. MUTUIONLINE | Sterling Construction vs. Burlington Stores |
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 Stocks Directory module to find actively traded stocks across global markets.
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