Correlation Between CAREER EDUCATION and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both CAREER EDUCATION and Burlington Stores 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 CAREER EDUCATION and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAREER EDUCATION and Burlington Stores, you can compare the effects of market volatilities on CAREER EDUCATION and Burlington Stores 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 CAREER EDUCATION with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAREER EDUCATION and Burlington Stores.
Diversification Opportunities for CAREER EDUCATION and Burlington Stores
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CAREER and Burlington is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding CAREER EDUCATION and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and CAREER EDUCATION 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 CAREER EDUCATION are associated (or correlated) with Burlington Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burlington Stores has no effect on the direction of CAREER EDUCATION i.e., CAREER EDUCATION and Burlington Stores go up and down completely randomly.
Pair Corralation between CAREER EDUCATION and Burlington Stores
Assuming the 90 days trading horizon CAREER EDUCATION is expected to generate 1.09 times more return on investment than Burlington Stores. However, CAREER EDUCATION is 1.09 times more volatile than Burlington Stores. It trades about 0.1 of its potential returns per unit of risk. Burlington Stores is currently generating about 0.09 per unit of risk. If you would invest 1,097 in CAREER EDUCATION on September 12, 2024 and sell it today you would earn a total of 1,423 from holding CAREER EDUCATION or generate 129.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAREER EDUCATION vs. Burlington Stores
Performance |
| Timeline |
| CAREER EDUCATION |
| Burlington Stores |
CAREER EDUCATION and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAREER EDUCATION and Burlington Stores
The main advantage of trading using opposite CAREER EDUCATION and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAREER EDUCATION position performs unexpectedly, Burlington Stores 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 Burlington Stores will offset losses from the drop in Burlington Stores' long position.| CAREER EDUCATION vs. Apple Inc | CAREER EDUCATION vs. Apple Inc | CAREER EDUCATION vs. Apple Inc | CAREER EDUCATION vs. Apple Inc |
| Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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