Correlation Between Burlington Stores and New Oriental
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and New Oriental 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 New Oriental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and New Oriental Education, you can compare the effects of market volatilities on Burlington Stores and New Oriental 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 New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and New Oriental.
Diversification Opportunities for Burlington Stores and New Oriental
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Burlington and New is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and New Oriental Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education 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 New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of Burlington Stores i.e., Burlington Stores and New Oriental go up and down completely randomly.
Pair Corralation between Burlington Stores and New Oriental
Assuming the 90 days trading horizon Burlington Stores is expected to generate 138.6 times more return on investment than New Oriental. However, Burlington Stores is 138.6 times more volatile than New Oriental Education. It trades about 0.2 of its potential returns per unit of risk. New Oriental Education is currently generating about -0.22 per unit of risk. If you would invest 425,300 in Burlington Stores on August 31, 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burlington Stores vs. New Oriental Education
Performance |
| Timeline |
| Burlington Stores |
| New Oriental Education |
Burlington Stores and New Oriental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and New Oriental
The main advantage of trading using opposite Burlington Stores and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, New Oriental 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 New Oriental will offset losses from the drop in New Oriental'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 |
| New Oriental vs. The Select Sector | New Oriental vs. Promotora y Operadora | New Oriental vs. SPDR Series Trust | New Oriental vs. iShares Trust |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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