Correlation Between Burlington Stores and Card Factory
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Card Factory 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 Card Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Card Factory plc, you can compare the effects of market volatilities on Burlington Stores and Card Factory 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 Card Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Card Factory.
Diversification Opportunities for Burlington Stores and Card Factory
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Burlington and Card is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Card Factory plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Card Factory plc 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 Card Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Card Factory plc has no effect on the direction of Burlington Stores i.e., Burlington Stores and Card Factory go up and down completely randomly.
Pair Corralation between Burlington Stores and Card Factory
Given the investment horizon of 90 days Burlington Stores is expected to generate 20.71 times less return on investment than Card Factory. But when comparing it to its historical volatility, Burlington Stores is 18.66 times less risky than Card Factory. It trades about 0.04 of its potential returns per unit of risk. Card Factory plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2.01 in Card Factory plc on August 24, 2024 and sell it today you would earn a total of 115.99 from holding Card Factory plc or generate 5770.65% 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. Card Factory plc
Performance |
| Timeline |
| Burlington Stores |
| Card Factory plc |
Burlington Stores and Card Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and Card Factory
The main advantage of trading using opposite Burlington Stores and Card Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Card Factory 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 Card Factory will offset losses from the drop in Card Factory's long position.| Burlington Stores vs. The TJX Companies | Burlington Stores vs. Guess Inc | Burlington Stores vs. Urban Outfitters | Burlington Stores vs. Childrens Place |
| Card Factory vs. Burlington Stores | Card Factory vs. Childrens Place | Card Factory vs. Buckle Inc | Card Factory vs. Shoe Carnival |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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