Correlation Between Halfords Group and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Halfords Group 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 Halfords Group and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Halfords Group PLC and Burlington Stores, you can compare the effects of market volatilities on Halfords Group 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 Halfords Group with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halfords Group and Burlington Stores.
Diversification Opportunities for Halfords Group and Burlington Stores
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Halfords and Burlington is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Halfords Group PLC and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Halfords Group 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 Halfords Group PLC 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 Halfords Group i.e., Halfords Group and Burlington Stores go up and down completely randomly.
Pair Corralation between Halfords Group and Burlington Stores
Assuming the 90 days horizon Halfords Group PLC is expected to under-perform the Burlington Stores. But the pink sheet apears to be less risky and, when comparing its historical volatility, Halfords Group PLC is 1.5 times less risky than Burlington Stores. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Burlington Stores is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 25,463 in Burlington Stores on August 30, 2024 and sell it today you would earn a total of 3,373 from holding Burlington Stores or generate 13.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Halfords Group PLC vs. Burlington Stores
Performance |
| Timeline |
| Halfords Group PLC |
| Burlington Stores |
Halfords Group and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Halfords Group and Burlington Stores
The main advantage of trading using opposite Halfords Group and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halfords Group 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.| Halfords Group vs. Evgo Inc | Halfords Group vs. Ulta Beauty | Halfords Group vs. Best Buy Co | Halfords Group vs. RH |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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