Correlation Between NEL ASA and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both NEL ASA 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 NEL ASA and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEL ASA ADR30 and Burlington Stores, you can compare the effects of market volatilities on NEL ASA 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 NEL ASA with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEL ASA and Burlington Stores.
Diversification Opportunities for NEL ASA and Burlington Stores
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NEL and Burlington is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding NEL ASA ADR30 and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and NEL ASA 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 NEL ASA ADR30 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 NEL ASA i.e., NEL ASA and Burlington Stores go up and down completely randomly.
Pair Corralation between NEL ASA and Burlington Stores
Assuming the 90 days trading horizon NEL ASA ADR30 is expected to generate 2.61 times more return on investment than Burlington Stores. However, NEL ASA is 2.61 times more volatile than Burlington Stores. It trades about 0.12 of its potential returns per unit of risk. Burlington Stores is currently generating about -0.6 per unit of risk. If you would invest 520.00 in NEL ASA ADR30 on November 27, 2024 and sell it today you would earn a total of 45.00 from holding NEL ASA ADR30 or generate 8.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
NEL ASA ADR30 vs. Burlington Stores
Performance |
| Timeline |
| NEL ASA ADR30 |
| Burlington Stores |
NEL ASA and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEL ASA and Burlington Stores
The main advantage of trading using opposite NEL ASA and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEL ASA 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.| NEL ASA vs. PARKEN Sport Entertainment | NEL ASA vs. NH HOTEL GROUP | NEL ASA vs. Sunstone Hotel Investors | NEL ASA vs. Melco Resorts Entertainment |
| Burlington Stores vs. Adtalem Global Education | Burlington Stores vs. Flutter Entertainment PLC | Burlington Stores vs. ProSiebenSat1 Media SE | Burlington Stores vs. American Public Education |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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