Correlation Between EBay and BURLINGTON STORES

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

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

Diversification Opportunities for EBay and BURLINGTON STORES

0.13

Correlation Coefficient

EBay  BURLINGTON STORES

Average diversification

The 3 months correlation between EBay and BURLINGTON is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding eBay Inc and BURLINGTON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BURLINGTON STORES and EBay 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 eBay Inc 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 EBay i.e., EBay and BURLINGTON STORES go up and down completely randomly.

Pair Corralation between EBay and BURLINGTON STORES

Assuming the 90 days trading horizon eBay Inc is expected to generate 0.92 times more return on investment than BURLINGTON STORES. However, eBay Inc is 1.09 times less risky than BURLINGTON STORES. It trades about 0.03 of its potential returns per unit of risk. BURLINGTON STORES is currently generating about -0.11 per unit of risk. If you would invest  6,004  in eBay Inc on December 29, 2024 and sell it today you would earn a total of  208.00  from holding eBay Inc or generate 3.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

eBay Inc  vs.  BURLINGTON STORES

eBay Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in eBay Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, EBay is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

BURLINGTON STORES

Risk-Adjusted Performance

Very Weak

Over the last 90 days BURLINGTON STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with EBay and BURLINGTON STORES

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

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.