Correlation Between Western Digital and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Western Digital 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 Western Digital and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and Burlington Stores, you can compare the effects of market volatilities on Western Digital 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 Western Digital with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and Burlington Stores.
Diversification Opportunities for Western Digital and Burlington Stores
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and Burlington is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Western Digital 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 Western Digital 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 Western Digital i.e., Western Digital and Burlington Stores go up and down completely randomly.
Pair Corralation between Western Digital and Burlington Stores
Considering the 90-day investment horizon Western Digital is expected to generate 7.64 times less return on investment than Burlington Stores. In addition to that, Western Digital is 1.07 times more volatile than Burlington Stores. It trades about 0.01 of its total potential returns per unit of risk. Burlington Stores is currently generating about 0.1 per unit of volatility. If you would invest 19,930 in Burlington Stores on September 3, 2024 and sell it today you would earn a total of 8,258 from holding Burlington Stores or generate 41.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Digital vs. Burlington Stores
Performance |
| Timeline |
| Western Digital |
| Burlington Stores |
Western Digital and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and Burlington Stores
The main advantage of trading using opposite Western Digital and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital 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.| Western Digital vs. NetApp Inc | Western Digital vs. Logitech International SA | Western Digital vs. HP Inc | Western Digital vs. Dell Technologies |
| 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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