Correlation Between RETAIL FOOD and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both RETAIL FOOD 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 RETAIL FOOD and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RETAIL FOOD GROUP and Burlington Stores, you can compare the effects of market volatilities on RETAIL FOOD 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 RETAIL FOOD with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of RETAIL FOOD and Burlington Stores.
Diversification Opportunities for RETAIL FOOD and Burlington Stores
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RETAIL and Burlington is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and RETAIL FOOD 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 RETAIL FOOD 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 RETAIL FOOD i.e., RETAIL FOOD and Burlington Stores go up and down completely randomly.
Pair Corralation between RETAIL FOOD and Burlington Stores
Assuming the 90 days trading horizon RETAIL FOOD is expected to generate 1.29 times less return on investment than Burlington Stores. In addition to that, RETAIL FOOD is 1.05 times more volatile than Burlington Stores. It trades about 0.24 of its total potential returns per unit of risk. Burlington Stores is currently generating about 0.33 per unit of volatility. If you would invest 23,200 in Burlington Stores on August 30, 2024 and sell it today you would earn a total of 4,200 from holding Burlington Stores or generate 18.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RETAIL FOOD GROUP vs. Burlington Stores
Performance |
| Timeline |
| RETAIL FOOD GROUP |
| Burlington Stores |
RETAIL FOOD and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RETAIL FOOD and Burlington Stores
The main advantage of trading using opposite RETAIL FOOD and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD 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.| RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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