Correlation Between REVO INSURANCE and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both REVO INSURANCE 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 REVO INSURANCE and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REVO INSURANCE SPA and Burlington Stores, you can compare the effects of market volatilities on REVO INSURANCE 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 REVO INSURANCE with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of REVO INSURANCE and Burlington Stores.
Diversification Opportunities for REVO INSURANCE and Burlington Stores
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between REVO and Burlington is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding REVO INSURANCE SPA and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and REVO INSURANCE 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 REVO INSURANCE 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 REVO INSURANCE i.e., REVO INSURANCE and Burlington Stores go up and down completely randomly.
Pair Corralation between REVO INSURANCE and Burlington Stores
Assuming the 90 days horizon REVO INSURANCE is expected to generate 1.18 times less return on investment than Burlington Stores. But when comparing it to its historical volatility, REVO INSURANCE SPA is 1.12 times less risky than Burlington Stores. It trades about 0.38 of its potential returns per unit of risk. Burlington Stores is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 24,200 in Burlington Stores on September 12, 2024 and sell it today you would earn a total of 3,400 from holding Burlington Stores or generate 14.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REVO INSURANCE SPA vs. Burlington Stores
Performance |
| Timeline |
| REVO INSURANCE SPA |
| Burlington Stores |
REVO INSURANCE and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REVO INSURANCE and Burlington Stores
The main advantage of trading using opposite REVO INSURANCE and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REVO INSURANCE 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.| REVO INSURANCE vs. Lyxor 1 | REVO INSURANCE vs. Xtrackers LevDAX | REVO INSURANCE vs. Xtrackers ShortDAX | REVO INSURANCE vs. Superior Plus Corp |
| Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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