Correlation Between Burlington Stores and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Micron Technology 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 Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Micron Technology, you can compare the effects of market volatilities on Burlington Stores and Micron Technology 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 Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Micron Technology.
Diversification Opportunities for Burlington Stores and Micron Technology
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Burlington and Micron is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Burlington Stores i.e., Burlington Stores and Micron Technology go up and down completely randomly.
Pair Corralation between Burlington Stores and Micron Technology
Assuming the 90 days trading horizon Burlington Stores is expected to generate 3.25 times more return on investment than Micron Technology. However, Burlington Stores is 3.25 times more volatile than Micron Technology. It trades about 0.22 of its potential returns per unit of risk. Micron Technology is currently generating about 0.01 per unit of risk. If you would invest 425,300 in Burlington Stores on August 28, 2024 and sell it today you would earn a total of 184,700 from holding Burlington Stores or generate 43.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burlington Stores vs. Micron Technology
Performance |
| Timeline |
| Burlington Stores |
| Micron Technology |
Burlington Stores and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and Micron Technology
The main advantage of trading using opposite Burlington Stores and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.| Burlington Stores vs. Cognizant Technology Solutions | Burlington Stores vs. United States Steel | Burlington Stores vs. Verizon Communications | Burlington Stores vs. Genworth Financial |
| Micron Technology vs. The Bank of | Micron Technology vs. Burlington Stores | Micron Technology vs. Grupo Carso SAB | Micron Technology 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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