Correlation Between Burlington Stores and Abercrombie Fitch
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Abercrombie Fitch 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 Abercrombie Fitch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Abercrombie Fitch, you can compare the effects of market volatilities on Burlington Stores and Abercrombie Fitch 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 Abercrombie Fitch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Abercrombie Fitch.
Diversification Opportunities for Burlington Stores and Abercrombie Fitch
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Burlington and Abercrombie is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Abercrombie Fitch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abercrombie Fitch 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 Abercrombie Fitch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abercrombie Fitch has no effect on the direction of Burlington Stores i.e., Burlington Stores and Abercrombie Fitch go up and down completely randomly.
Pair Corralation between Burlington Stores and Abercrombie Fitch
Given the investment horizon of 90 days Burlington Stores is expected to generate 1.55 times less return on investment than Abercrombie Fitch. But when comparing it to its historical volatility, Burlington Stores is 1.62 times less risky than Abercrombie Fitch. It trades about 0.1 of its potential returns per unit of risk. Abercrombie Fitch is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,773 in Abercrombie Fitch on August 24, 2024 and sell it today you would earn a total of 7,256 from holding Abercrombie Fitch or generate 93.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burlington Stores vs. Abercrombie Fitch
Performance |
| Timeline |
| Burlington Stores |
| Abercrombie Fitch |
Burlington Stores and Abercrombie Fitch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and Abercrombie Fitch
The main advantage of trading using opposite Burlington Stores and Abercrombie Fitch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Abercrombie Fitch 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 Abercrombie Fitch will offset losses from the drop in Abercrombie Fitch's long position.| Burlington Stores vs. The TJX Companies | Burlington Stores vs. Guess Inc | Burlington Stores vs. Urban Outfitters | Burlington Stores vs. Childrens Place |
| Abercrombie Fitch vs. Urban Outfitters | Abercrombie Fitch vs. Foot Locker | Abercrombie Fitch vs. Childrens Place | Abercrombie Fitch vs. American Eagle Outfitters |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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