Correlation Between Leonardo Spa and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Leonardo Spa 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 Leonardo Spa and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leonardo Spa and Burlington Stores, you can compare the effects of market volatilities on Leonardo Spa 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 Leonardo Spa with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leonardo Spa and Burlington Stores.
Diversification Opportunities for Leonardo Spa and Burlington Stores
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leonardo and Burlington is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Leonardo Spa and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Leonardo Spa 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 Leonardo Spa 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 Leonardo Spa i.e., Leonardo Spa and Burlington Stores go up and down completely randomly.
Pair Corralation between Leonardo Spa and Burlington Stores
Assuming the 90 days horizon Leonardo Spa is expected to generate 1.93 times less return on investment than Burlington Stores. In addition to that, Leonardo Spa is 2.33 times more volatile than Burlington Stores. It trades about 0.07 of its total potential returns per unit of risk. Burlington Stores is currently generating about 0.32 per unit of volatility. If you would invest 25,814 in Burlington Stores on September 12, 2024 and sell it today you would earn a total of 3,213 from holding Burlington Stores or generate 12.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Leonardo Spa vs. Burlington Stores
Performance |
| Timeline |
| Leonardo Spa |
| Burlington Stores |
Leonardo Spa and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leonardo Spa and Burlington Stores
The main advantage of trading using opposite Leonardo Spa and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leonardo Spa 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.| Leonardo Spa vs. Burlington Stores | Leonardo Spa vs. Boyd Gaming | Leonardo Spa vs. JJill Inc | Leonardo Spa vs. The Gap, |
| Burlington Stores vs. Foot Locker | Burlington Stores vs. Lands End | Burlington Stores vs. Duluth Holdings | Burlington Stores vs. Destination XL 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |