Correlation Between DAIRY FARM and BURLINGTON STORES
Can any of the company-specific risk be diversified away by investing in both DAIRY FARM 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 DAIRY FARM and BURLINGTON STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAIRY FARM INTL and BURLINGTON STORES, you can compare the effects of market volatilities on DAIRY FARM 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 DAIRY FARM with a short position of BURLINGTON STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIRY FARM and BURLINGTON STORES.
Diversification Opportunities for DAIRY FARM and BURLINGTON STORES
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DAIRY and BURLINGTON is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL and BURLINGTON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BURLINGTON STORES and DAIRY FARM 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 DAIRY FARM INTL 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 DAIRY FARM i.e., DAIRY FARM and BURLINGTON STORES go up and down completely randomly.
Pair Corralation between DAIRY FARM and BURLINGTON STORES
Assuming the 90 days trading horizon DAIRY FARM INTL is expected to under-perform the BURLINGTON STORES. But the stock apears to be less risky and, when comparing its historical volatility, DAIRY FARM INTL is 1.39 times less risky than BURLINGTON STORES. The stock trades about -0.04 of its potential returns per unit of risk. The BURLINGTON STORES is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 27,400 in BURLINGTON STORES on October 12, 2024 and sell it today you would earn a total of 200.00 from holding BURLINGTON STORES or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAIRY FARM INTL vs. BURLINGTON STORES
Performance |
| Timeline |
| DAIRY FARM INTL |
| BURLINGTON STORES |
DAIRY FARM and BURLINGTON STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAIRY FARM and BURLINGTON STORES
The main advantage of trading using opposite DAIRY FARM and BURLINGTON STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIRY FARM 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's long position.| DAIRY FARM vs. NORTHEAST UTILITIES | DAIRY FARM vs. Canadian Utilities Limited | DAIRY FARM vs. UNITED UTILITIES GR | DAIRY FARM vs. VIENNA INSURANCE GR |
| BURLINGTON STORES vs. CARSALESCOM | BURLINGTON STORES vs. BOS BETTER ONLINE | BURLINGTON STORES vs. DAIRY FARM INTL | BURLINGTON STORES vs. Dairy Farm International |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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