Correlation Between Nufarm and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Nufarm 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 Nufarm and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nufarm Limited and Burlington Stores, you can compare the effects of market volatilities on Nufarm 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 Nufarm with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm and Burlington Stores.
Diversification Opportunities for Nufarm and Burlington Stores
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nufarm and Burlington is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Limited and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Nufarm 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 Nufarm Limited 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 Nufarm i.e., Nufarm and Burlington Stores go up and down completely randomly.
Pair Corralation between Nufarm and Burlington Stores
Assuming the 90 days horizon Nufarm Limited is expected to under-perform the Burlington Stores. But the stock apears to be less risky and, when comparing its historical volatility, Nufarm Limited is 1.28 times less risky than Burlington Stores. The stock trades about -0.05 of its potential returns per unit of risk. The Burlington Stores is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 18,100 in Burlington Stores on September 12, 2024 and sell it today you would earn a total of 9,300 from holding Burlington Stores or generate 51.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nufarm Limited vs. Burlington Stores
Performance |
| Timeline |
| Nufarm Limited |
| Burlington Stores |
Nufarm and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm and Burlington Stores
The main advantage of trading using opposite Nufarm and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm 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.| Nufarm vs. Superior Plus Corp | Nufarm vs. SIVERS SEMICONDUCTORS AB | Nufarm vs. NorAm Drilling AS | Nufarm vs. Norsk Hydro ASA |
| Burlington Stores vs. Amkor Technology | Burlington Stores vs. RCM TECHNOLOGIES | Burlington Stores vs. Samsung Electronics Co | Burlington Stores vs. AM EAGLE OUTFITTERS |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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