Correlation Between Burlington Stores and Hoteles City
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Hoteles City 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 Hoteles City into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Hoteles City Express, you can compare the effects of market volatilities on Burlington Stores and Hoteles City 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 Hoteles City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Hoteles City.
Diversification Opportunities for Burlington Stores and Hoteles City
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Burlington and Hoteles is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Hoteles City Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoteles City Express 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 Hoteles City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoteles City Express has no effect on the direction of Burlington Stores i.e., Burlington Stores and Hoteles City go up and down completely randomly.
Pair Corralation between Burlington Stores and Hoteles City
Assuming the 90 days trading horizon Burlington Stores is expected to generate 4.84 times more return on investment than Hoteles City. However, Burlington Stores is 4.84 times more volatile than Hoteles City Express. It trades about 0.2 of its potential returns per unit of risk. Hoteles City Express is currently generating about 0.02 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. Hoteles City Express
Performance |
| Timeline |
| Burlington Stores |
| Hoteles City Express |
Burlington Stores and Hoteles City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and Hoteles City
The main advantage of trading using opposite Burlington Stores and Hoteles City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Hoteles City 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 Hoteles City will offset losses from the drop in Hoteles City'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 |
| Hoteles City vs. CEMEX SAB de | Hoteles City vs. Grupo Financiero Banorte | Hoteles City vs. Grupo Bimbo SAB | Hoteles City vs. Fomento Econmico Mexicano |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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