Correlation Between JJill and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both JJill 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 JJill and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JJill Inc and Burlington Stores, you can compare the effects of market volatilities on JJill 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 JJill with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of JJill and Burlington Stores.
Diversification Opportunities for JJill and Burlington Stores
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JJill and Burlington is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding JJill Inc and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and JJill 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 JJill Inc 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 JJill i.e., JJill and Burlington Stores go up and down completely randomly.
Pair Corralation between JJill and Burlington Stores
Given the investment horizon of 90 days JJill is expected to generate 1.24 times less return on investment than Burlington Stores. In addition to that, JJill is 1.28 times more volatile than Burlington Stores. It trades about 0.22 of its total potential returns per unit of risk. Burlington Stores is currently generating about 0.35 per unit of volatility. If you would invest 25,328 in Burlington Stores on August 28, 2024 and sell it today you would earn a total of 3,838 from holding Burlington Stores or generate 15.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JJill Inc vs. Burlington Stores
Performance |
| Timeline |
| JJill Inc |
| Burlington Stores |
JJill and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JJill and Burlington Stores
The main advantage of trading using opposite JJill and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JJill 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.The idea behind JJill Inc and Burlington Stores pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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