Correlation Between MITSUBISHI KAKOKI and BURLINGTON STORES

Can any of the company-specific risk be diversified away by investing in both MITSUBISHI KAKOKI 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 MITSUBISHI KAKOKI and BURLINGTON STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MITSUBISHI KAKOKI and BURLINGTON STORES, you can compare the effects of market volatilities on MITSUBISHI KAKOKI 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 MITSUBISHI KAKOKI with a short position of BURLINGTON STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of MITSUBISHI KAKOKI and BURLINGTON STORES.

Diversification Opportunities for MITSUBISHI KAKOKI and BURLINGTON STORES

-0.52

Correlation Coefficient

MITSUBISHI KAKOKI  BURLINGTON STORES

Excellent diversification

The 3 months correlation between MITSUBISHI and BURLINGTON is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding MITSUBISHI KAKOKI and BURLINGTON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BURLINGTON STORES and MITSUBISHI KAKOKI 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 MITSUBISHI KAKOKI 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 MITSUBISHI KAKOKI i.e., MITSUBISHI KAKOKI and BURLINGTON STORES go up and down completely randomly.

Pair Corralation between MITSUBISHI KAKOKI and BURLINGTON STORES

Assuming the 90 days horizon MITSUBISHI KAKOKI is expected to under-perform the BURLINGTON STORES. In addition to that, MITSUBISHI KAKOKI is 1.06 times more volatile than BURLINGTON STORES. It trades about -0.02 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  24,200  in BURLINGTON STORES on September 18, 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 Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

MITSUBISHI KAKOKI  vs.  BURLINGTON STORES

MITSUBISHI KAKOKI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MITSUBISHI KAKOKI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MITSUBISHI KAKOKI is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

BURLINGTON STORES

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BURLINGTON STORES are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, BURLINGTON STORES exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MITSUBISHI KAKOKI and BURLINGTON STORES

The main advantage of trading using opposite MITSUBISHI KAKOKI and BURLINGTON STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MITSUBISHI KAKOKI 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.

The idea behind MITSUBISHI KAKOKI and BURLINGTON STORES pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.