Correlation Between Shoe Carnival and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Shoe Carnival 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 Shoe Carnival and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shoe Carnival and Burlington Stores, you can compare the effects of market volatilities on Shoe Carnival 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 Shoe Carnival with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoe Carnival and Burlington Stores.
Diversification Opportunities for Shoe Carnival and Burlington Stores
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shoe and Burlington is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Shoe Carnival and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Shoe Carnival 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 Shoe Carnival 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 Shoe Carnival i.e., Shoe Carnival and Burlington Stores go up and down completely randomly.
Pair Corralation between Shoe Carnival and Burlington Stores
Given the investment horizon of 90 days Shoe Carnival is expected to under-perform the Burlington Stores. In addition to that, Shoe Carnival is 1.58 times more volatile than Burlington Stores. It trades about -0.28 of its total potential returns per unit of risk. Burlington Stores is currently generating about 0.06 per unit of volatility. If you would invest 28,370 in Burlington Stores on October 24, 2024 and sell it today you would earn a total of 390.00 from holding Burlington Stores or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Shoe Carnival vs. Burlington Stores
Performance |
| Timeline |
| Shoe Carnival |
| Burlington Stores |
Shoe Carnival and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shoe Carnival and Burlington Stores
The main advantage of trading using opposite Shoe Carnival and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shoe Carnival 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.| Shoe Carnival vs. Citi Trends | Shoe Carnival vs. Zumiez Inc | Shoe Carnival vs. Buckle Inc | Shoe Carnival vs. Cato Corporation |
| 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 Stocks Directory module to find actively traded stocks across global markets.
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