Correlation Between TAL Education and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both TAL Education 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 TAL Education and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TAL Education Group and Burlington Stores, you can compare the effects of market volatilities on TAL Education 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 TAL Education with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and Burlington Stores.
Diversification Opportunities for TAL Education and Burlington Stores
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between TAL and Burlington is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and TAL Education 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 TAL Education Group 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 TAL Education i.e., TAL Education and Burlington Stores go up and down completely randomly.
Pair Corralation between TAL Education and Burlington Stores
Assuming the 90 days trading horizon TAL Education Group is expected to under-perform the Burlington Stores. In addition to that, TAL Education is 1.65 times more volatile than Burlington Stores. It trades about -0.13 of its total potential returns per unit of risk. Burlington Stores is currently generating about 0.38 per unit of volatility. If you would invest 22,600 in Burlington Stores on September 4, 2024 and sell it today you would earn a total of 4,200 from holding Burlington Stores or generate 18.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
TAL Education Group vs. Burlington Stores
Performance |
Timeline |
TAL Education Group |
Burlington Stores |
TAL Education and Burlington Stores Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TAL Education and Burlington Stores
The main advantage of trading using opposite TAL Education and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education 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.TAL Education vs. Apple Inc | TAL Education vs. Apple Inc | TAL Education vs. Apple Inc | TAL Education vs. Apple Inc |
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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