Correlation Between Walmart and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Walmart 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 Walmart and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Burlington Stores, you can compare the effects of market volatilities on Walmart 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 Walmart with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Burlington Stores.
Diversification Opportunities for Walmart and Burlington Stores
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walmart and Burlington is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Walmart 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 Walmart 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 Walmart i.e., Walmart and Burlington Stores go up and down completely randomly.
Pair Corralation between Walmart and Burlington Stores
Assuming the 90 days trading horizon Walmart is expected to generate 1.6 times less return on investment than Burlington Stores. But when comparing it to its historical volatility, Walmart is 1.8 times less risky than Burlington Stores. It trades about 0.41 of its potential returns per unit of risk. Burlington Stores is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 23,200 in Burlington Stores on August 29, 2024 and sell it today you would earn a total of 5,000 from holding Burlington Stores or generate 21.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Burlington Stores
Performance |
| Timeline |
| Walmart |
| Burlington Stores |
Walmart and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Burlington Stores
The main advantage of trading using opposite Walmart and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart 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.| Walmart vs. Ryanair Holdings plc | Walmart vs. Safety Insurance Group | Walmart vs. Ping An Insurance | Walmart vs. Fair Isaac Corp |
| Burlington Stores vs. Walmart | Burlington Stores vs. Walmart | Burlington Stores vs. Costco Wholesale | Burlington Stores vs. Target |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |