Correlation Between Old Republic and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Old Republic 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 Old Republic and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Republic International and Burlington Stores, you can compare the effects of market volatilities on Old Republic 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 Old Republic with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Burlington Stores.
Diversification Opportunities for Old Republic and Burlington Stores
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Old and Burlington is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Old Republic 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 Old Republic International 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 Old Republic i.e., Old Republic and Burlington Stores go up and down completely randomly.
Pair Corralation between Old Republic and Burlington Stores
Considering the 90-day investment horizon Old Republic International is expected to generate 0.5 times more return on investment than Burlington Stores. However, Old Republic International is 2.01 times less risky than Burlington Stores. It trades about 0.1 of its potential returns per unit of risk. Burlington Stores is currently generating about 0.04 per unit of risk. If you would invest 2,256 in Old Republic International on September 2, 2024 and sell it today you would earn a total of 1,641 from holding Old Republic International or generate 72.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Republic International vs. Burlington Stores
Performance |
| Timeline |
| Old Republic Interna |
| Burlington Stores |
Old Republic and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Republic and Burlington Stores
The main advantage of trading using opposite Old Republic and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic 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.| Old Republic vs. Axa Equitable Holdings | Old Republic vs. American International Group | Old Republic vs. Arch Capital Group | Old Republic vs. Sun Life Financial |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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