Correlation Between Burlington Stores and Amazon
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Amazon 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 Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Amazon Inc, you can compare the effects of market volatilities on Burlington Stores and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Amazon.
Diversification Opportunities for Burlington Stores and Amazon
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Burlington and Amazon is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Burlington Stores i.e., Burlington Stores and Amazon go up and down completely randomly.
Pair Corralation between Burlington Stores and Amazon
Assuming the 90 days trading horizon Burlington Stores is expected to generate 2.78 times more return on investment than Amazon. However, Burlington Stores is 2.78 times more volatile than Amazon Inc. It trades about 0.12 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.16 per unit of risk. If you would invest 425,300 in Burlington Stores on August 30, 2024 and sell it today you would earn a total of 168,900 from holding Burlington Stores or generate 39.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burlington Stores vs. Amazon Inc
Performance |
| Timeline |
| Burlington Stores |
| Amazon Inc |
Burlington Stores and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and Amazon
The main advantage of trading using opposite Burlington Stores and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| Burlington Stores vs. First Majestic Silver | Burlington Stores vs. Grupo Sports World | Burlington Stores vs. Verizon Communications | Burlington Stores vs. New Oriental Education |
| Amazon vs. Samsung Electronics Co | Amazon vs. Martin Marietta Materials | Amazon vs. Taiwan Semiconductor Manufacturing | Amazon vs. United States Steel |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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