Correlation Between Foot Locker and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Foot Locker 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 Foot Locker and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foot Locker and Burlington Stores, you can compare the effects of market volatilities on Foot Locker 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 Foot Locker with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foot Locker and Burlington Stores.
Diversification Opportunities for Foot Locker and Burlington Stores
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Foot and Burlington is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Foot Locker and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Foot Locker 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 Foot Locker 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 Foot Locker i.e., Foot Locker and Burlington Stores go up and down completely randomly.
Pair Corralation between Foot Locker and Burlington Stores
Allowing for the 90-day total investment horizon Foot Locker is expected to under-perform the Burlington Stores. In addition to that, Foot Locker is 1.58 times more volatile than Burlington Stores. It trades about 0.0 of its total potential returns per unit of risk. Burlington Stores is currently generating about 0.04 per unit of volatility. If you would invest 19,965 in Burlington Stores on August 27, 2024 and sell it today you would earn a total of 8,652 from holding Burlington Stores or generate 43.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foot Locker vs. Burlington Stores
Performance |
| Timeline |
| Foot Locker |
| Burlington Stores |
Foot Locker and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foot Locker and Burlington Stores
The main advantage of trading using opposite Foot Locker and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foot Locker 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.| Foot Locker vs. Abercrombie Fitch | Foot Locker vs. Urban Outfitters | Foot Locker vs. Childrens Place | Foot Locker vs. American Eagle Outfitters |
| Burlington Stores vs. The TJX Companies | Burlington Stores vs. Guess Inc | Burlington Stores vs. Urban Outfitters | Burlington Stores vs. Childrens Place |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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