Correlation Between US Bancorp and BURLINGTON STORES
Can any of the company-specific risk be diversified away by investing in both US Bancorp 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 US Bancorp and BURLINGTON STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Bancorp and BURLINGTON STORES, you can compare the effects of market volatilities on US Bancorp 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 US Bancorp with a short position of BURLINGTON STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and BURLINGTON STORES.
Diversification Opportunities for US Bancorp and BURLINGTON STORES
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UB5 and BURLINGTON is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and BURLINGTON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BURLINGTON STORES and US Bancorp 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 US Bancorp 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 US Bancorp i.e., US Bancorp and BURLINGTON STORES go up and down completely randomly.
Pair Corralation between US Bancorp and BURLINGTON STORES
Assuming the 90 days horizon US Bancorp is expected to generate 8.27 times less return on investment than BURLINGTON STORES. But when comparing it to its historical volatility, US Bancorp is 1.59 times less risky than BURLINGTON STORES. It trades about 0.06 of its potential returns per unit of risk. BURLINGTON STORES is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 24,200 in BURLINGTON STORES on September 13, 2024 and sell it today you would earn a total of 3,200 from holding BURLINGTON STORES or generate 13.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Bancorp vs. BURLINGTON STORES
Performance |
| Timeline |
| US Bancorp |
| BURLINGTON STORES |
US Bancorp and BURLINGTON STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and BURLINGTON STORES
The main advantage of trading using opposite US Bancorp and BURLINGTON STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp 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's long position.| US Bancorp vs. BURLINGTON STORES | US Bancorp vs. MARKET VECTR RETAIL | US Bancorp vs. KOOL2PLAY SA ZY | US Bancorp vs. PLAY2CHILL SA ZY |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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