Correlation Between Burlington Stores and X FAB
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and X FAB 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 X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and X FAB Silicon Foundries, you can compare the effects of market volatilities on Burlington Stores and X FAB 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 X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and X FAB.
Diversification Opportunities for Burlington Stores and X FAB
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Burlington and XFB is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Burlington Stores i.e., Burlington Stores and X FAB go up and down completely randomly.
Pair Corralation between Burlington Stores and X FAB
Assuming the 90 days trading horizon Burlington Stores is expected to generate 0.95 times more return on investment than X FAB. However, Burlington Stores is 1.05 times less risky than X FAB. It trades about 0.04 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.02 per unit of risk. If you would invest 18,500 in Burlington Stores on September 4, 2024 and sell it today you would earn a total of 8,300 from holding Burlington Stores or generate 44.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burlington Stores vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Burlington Stores |
| X FAB Silicon |
Burlington Stores and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and X FAB
The main advantage of trading using opposite Burlington Stores and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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