Correlation Between Burlington Stores and JD Sports
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and JD Sports 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 JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and JD Sports Fashion, you can compare the effects of market volatilities on Burlington Stores and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and JD Sports.
Diversification Opportunities for Burlington Stores and JD Sports
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Burlington and JDDSF is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Burlington Stores i.e., Burlington Stores and JD Sports go up and down completely randomly.
Pair Corralation between Burlington Stores and JD Sports
Given the investment horizon of 90 days Burlington Stores is expected to generate 1.34 times less return on investment than JD Sports. But when comparing it to its historical volatility, Burlington Stores is 1.91 times less risky than JD Sports. It trades about 0.04 of its potential returns per unit of risk. JD Sports Fashion is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 109.00 in JD Sports Fashion on August 29, 2024 and sell it today you would earn a total of 37.00 from holding JD Sports Fashion or generate 33.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burlington Stores vs. JD Sports Fashion
Performance |
| Timeline |
| Burlington Stores |
| JD Sports Fashion |
Burlington Stores and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and JD Sports
The main advantage of trading using opposite Burlington Stores and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| Burlington Stores vs. The TJX Companies | Burlington Stores vs. Guess Inc | Burlington Stores vs. Urban Outfitters | Burlington Stores vs. Childrens Place |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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