Correlation Between Burlington Stores and Titan Machinery
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Titan Machinery 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 Titan Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Titan Machinery, you can compare the effects of market volatilities on Burlington Stores and Titan Machinery 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 Titan Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Titan Machinery.
Diversification Opportunities for Burlington Stores and Titan Machinery
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Burlington and Titan is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery 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 Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of Burlington Stores i.e., Burlington Stores and Titan Machinery go up and down completely randomly.
Pair Corralation between Burlington Stores and Titan Machinery
Given the investment horizon of 90 days Burlington Stores is expected to generate 0.46 times more return on investment than Titan Machinery. However, Burlington Stores is 2.19 times less risky than Titan Machinery. It trades about 0.37 of its potential returns per unit of risk. Titan Machinery is currently generating about 0.16 per unit of risk. If you would invest 24,725 in Burlington Stores on September 3, 2024 and sell it today you would earn a total of 3,463 from holding Burlington Stores or generate 14.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burlington Stores vs. Titan Machinery
Performance |
| Timeline |
| Burlington Stores |
| Titan Machinery |
Burlington Stores and Titan Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and Titan Machinery
The main advantage of trading using opposite Burlington Stores and Titan Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Titan Machinery 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 Titan Machinery will offset losses from the drop in Titan Machinery's long position.| Burlington Stores vs. The TJX Companies | Burlington Stores vs. Guess Inc | Burlington Stores vs. Urban Outfitters | Burlington Stores vs. Childrens Place |
| Titan Machinery vs. DXP Enterprises | Titan Machinery vs. Watsco Inc | Titan Machinery vs. Distribution Solutions Group | Titan Machinery vs. SiteOne Landscape Supply |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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