Correlation Between CARSALESCOM and BURLINGTON STORES
Can any of the company-specific risk be diversified away by investing in both CARSALESCOM 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 CARSALESCOM and BURLINGTON STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and BURLINGTON STORES, you can compare the effects of market volatilities on CARSALESCOM 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 CARSALESCOM with a short position of BURLINGTON STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALESCOM and BURLINGTON STORES.
Diversification Opportunities for CARSALESCOM and BURLINGTON STORES
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CARSALESCOM and BURLINGTON is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM and BURLINGTON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BURLINGTON STORES and CARSALESCOM 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 CARSALESCOM 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 CARSALESCOM i.e., CARSALESCOM and BURLINGTON STORES go up and down completely randomly.
Pair Corralation between CARSALESCOM and BURLINGTON STORES
Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.64 times more return on investment than BURLINGTON STORES. However, CARSALESCOM is 1.55 times less risky than BURLINGTON STORES. It trades about 0.08 of its potential returns per unit of risk. BURLINGTON STORES is currently generating about 0.03 per unit of risk. If you would invest 1,365 in CARSALESCOM on October 27, 2024 and sell it today you would earn a total of 1,015 from holding CARSALESCOM or generate 74.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARSALESCOM vs. BURLINGTON STORES
Performance |
| Timeline |
| CARSALESCOM |
| BURLINGTON STORES |
CARSALESCOM and BURLINGTON STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALESCOM and BURLINGTON STORES
The main advantage of trading using opposite CARSALESCOM and BURLINGTON STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALESCOM 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.| CARSALESCOM vs. Apple Inc | CARSALESCOM vs. Apple Inc | CARSALESCOM vs. Apple Inc | CARSALESCOM vs. Apple Inc |
| BURLINGTON STORES vs. PLANT VEDA FOODS | BURLINGTON STORES vs. Aristocrat Leisure Limited | BURLINGTON STORES vs. THAI BEVERAGE | BURLINGTON STORES vs. Gaming and Leisure |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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