Correlation Between Burlington Stores and Chesapeake Energy
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Chesapeake Energy 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 Chesapeake Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Chesapeake Energy, you can compare the effects of market volatilities on Burlington Stores and Chesapeake Energy 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 Chesapeake Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Chesapeake Energy.
Diversification Opportunities for Burlington Stores and Chesapeake Energy
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Burlington and Chesapeake is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Chesapeake Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Energy 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 Chesapeake Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Energy has no effect on the direction of Burlington Stores i.e., Burlington Stores and Chesapeake Energy go up and down completely randomly.
Pair Corralation between Burlington Stores and Chesapeake Energy
Given the investment horizon of 90 days Burlington Stores is expected to generate 1.13 times more return on investment than Chesapeake Energy. However, Burlington Stores is 1.13 times more volatile than Chesapeake Energy. It trades about 0.05 of its potential returns per unit of risk. Chesapeake Energy is currently generating about -0.01 per unit of risk. If you would invest 19,305 in Burlington Stores on September 12, 2024 and sell it today you would earn a total of 9,722 from holding Burlington Stores or generate 50.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.1% |
| Values | Daily Returns |
Burlington Stores vs. Chesapeake Energy
Performance |
| Timeline |
| Burlington Stores |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Strong
Burlington Stores and Chesapeake Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and Chesapeake Energy
The main advantage of trading using opposite Burlington Stores and Chesapeake Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Chesapeake Energy 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 Chesapeake Energy will offset losses from the drop in Chesapeake Energy's long position.| Burlington Stores vs. Foot Locker | Burlington Stores vs. Lands End | Burlington Stores vs. Duluth Holdings | Burlington Stores vs. Destination XL Group |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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