Correlation Between Burlington Stores and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and ArcelorMittal 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 ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and ArcelorMittal SA ADR, you can compare the effects of market volatilities on Burlington Stores and ArcelorMittal 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 ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and ArcelorMittal.
Diversification Opportunities for Burlington Stores and ArcelorMittal
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Burlington and ArcelorMittal is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and ArcelorMittal SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA ADR 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 ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA ADR has no effect on the direction of Burlington Stores i.e., Burlington Stores and ArcelorMittal go up and down completely randomly.
Pair Corralation between Burlington Stores and ArcelorMittal
Given the investment horizon of 90 days Burlington Stores is expected to generate 0.94 times more return on investment than ArcelorMittal. However, Burlington Stores is 1.07 times less risky than ArcelorMittal. It trades about 0.1 of its potential returns per unit of risk. ArcelorMittal SA ADR is currently generating about -0.02 per unit of risk. If you would invest 23,406 in Burlington Stores on August 30, 2024 and sell it today you would earn a total of 5,430 from holding Burlington Stores or generate 23.2% 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. ArcelorMittal SA ADR
Performance |
| Timeline |
| Burlington Stores |
| ArcelorMittal SA ADR |
Burlington Stores and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and ArcelorMittal
The main advantage of trading using opposite Burlington Stores and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.| Burlington Stores vs. The TJX Companies | Burlington Stores vs. Guess Inc | Burlington Stores vs. Urban Outfitters | Burlington Stores vs. Childrens Place |
| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Ternium SA ADR | ArcelorMittal vs. Gerdau SA ADR | ArcelorMittal vs. POSCO Holdings |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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