Correlation Between ESH Acquisition and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both ESH Acquisition 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 ESH Acquisition and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESH Acquisition Corp and Burlington Stores, you can compare the effects of market volatilities on ESH Acquisition 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 ESH Acquisition with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESH Acquisition and Burlington Stores.
Diversification Opportunities for ESH Acquisition and Burlington Stores
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ESH and Burlington is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding ESH Acquisition Corp and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and ESH Acquisition 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 ESH Acquisition Corp 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 ESH Acquisition i.e., ESH Acquisition and Burlington Stores go up and down completely randomly.
Pair Corralation between ESH Acquisition and Burlington Stores
Given the investment horizon of 90 days ESH Acquisition is expected to generate 9.08 times less return on investment than Burlington Stores. But when comparing it to its historical volatility, ESH Acquisition Corp is 4.98 times less risky than Burlington Stores. It trades about 0.16 of its potential returns per unit of risk. Burlington Stores is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 26,752 in Burlington Stores on September 14, 2024 and sell it today you would earn a total of 2,797 from holding Burlington Stores or generate 10.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESH Acquisition Corp vs. Burlington Stores
Performance |
| Timeline |
| ESH Acquisition Corp |
| Burlington Stores |
ESH Acquisition and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESH Acquisition and Burlington Stores
The main advantage of trading using opposite ESH Acquisition and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESH Acquisition 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.| ESH Acquisition vs. Burlington Stores | ESH Acquisition vs. Acumen Pharmaceuticals | ESH Acquisition vs. Centessa Pharmaceuticals PLC | ESH Acquisition vs. JJill Inc |
| Burlington Stores vs. Capri Holdings | Burlington Stores vs. Movado Group | Burlington Stores vs. Tapestry | Burlington Stores vs. Brilliant Earth Group |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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