Correlation Between Burlington Stores and Ceconomy
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Ceconomy 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 Ceconomy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Ceconomy AG ADR, you can compare the effects of market volatilities on Burlington Stores and Ceconomy 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 Ceconomy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Ceconomy.
Diversification Opportunities for Burlington Stores and Ceconomy
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Burlington and Ceconomy is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Ceconomy AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceconomy AG 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 Ceconomy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceconomy AG ADR has no effect on the direction of Burlington Stores i.e., Burlington Stores and Ceconomy go up and down completely randomly.
Pair Corralation between Burlington Stores and Ceconomy
Given the investment horizon of 90 days Burlington Stores is expected to generate 1.76 times less return on investment than Ceconomy. But when comparing it to its historical volatility, Burlington Stores is 2.41 times less risky than Ceconomy. It trades about 0.09 of its potential returns per unit of risk. Ceconomy AG ADR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 39.00 in Ceconomy AG ADR on August 27, 2024 and sell it today you would earn a total of 18.00 from holding Ceconomy AG ADR or generate 46.15% 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. Ceconomy AG ADR
Performance |
| Timeline |
| Burlington Stores |
| Ceconomy AG ADR |
Burlington Stores and Ceconomy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and Ceconomy
The main advantage of trading using opposite Burlington Stores and Ceconomy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Ceconomy 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 Ceconomy will offset losses from the drop in Ceconomy's long position.| Burlington Stores vs. The TJX Companies | Burlington Stores vs. Guess Inc | Burlington Stores vs. Urban Outfitters | Burlington Stores vs. Childrens Place |
| Ceconomy vs. Burlington Stores | Ceconomy vs. Childrens Place | Ceconomy vs. Buckle Inc | Ceconomy 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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