Correlation Between Burlington Stores and Smith Douglas
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Smith Douglas 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 Smith Douglas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Smith Douglas Homes, you can compare the effects of market volatilities on Burlington Stores and Smith Douglas 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 Smith Douglas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Smith Douglas.
Diversification Opportunities for Burlington Stores and Smith Douglas
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Burlington and Smith is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Smith Douglas Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Douglas Homes 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 Smith Douglas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Douglas Homes has no effect on the direction of Burlington Stores i.e., Burlington Stores and Smith Douglas go up and down completely randomly.
Pair Corralation between Burlington Stores and Smith Douglas
Given the investment horizon of 90 days Burlington Stores is expected to generate 1.64 times less return on investment than Smith Douglas. But when comparing it to its historical volatility, Burlington Stores is 1.26 times less risky than Smith Douglas. It trades about 0.05 of its potential returns per unit of risk. Smith Douglas Homes is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,400 in Smith Douglas Homes on September 12, 2024 and sell it today you would earn a total of 889.00 from holding Smith Douglas Homes or generate 37.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 46.87% |
| Values | Daily Returns |
Burlington Stores vs. Smith Douglas Homes
Performance |
| Timeline |
| Burlington Stores |
| Smith Douglas Homes |
Burlington Stores and Smith Douglas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and Smith Douglas
The main advantage of trading using opposite Burlington Stores and Smith Douglas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Smith Douglas 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 Smith Douglas will offset losses from the drop in Smith Douglas' long position.| Burlington Stores vs. Foot Locker | Burlington Stores vs. Lands End | Burlington Stores vs. Duluth Holdings | Burlington Stores vs. Destination XL Group |
| Smith Douglas vs. Belpointe PREP LLC | Smith Douglas vs. Corporacin Inmobiliaria Vesta, | Smith Douglas vs. Alset Ehome International | Smith Douglas vs. American Realty Investors |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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