Correlation Between Industria and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Industria 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 Industria and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industria de Diseo and Burlington Stores, you can compare the effects of market volatilities on Industria 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 Industria with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industria and Burlington Stores.
Diversification Opportunities for Industria and Burlington Stores
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Industria and Burlington is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Industria de Diseo and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Industria 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 Industria de Diseo 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 Industria i.e., Industria and Burlington Stores go up and down completely randomly.
Pair Corralation between Industria and Burlington Stores
Assuming the 90 days horizon Industria de Diseo is expected to under-perform the Burlington Stores. In addition to that, Industria is 1.92 times more volatile than Burlington Stores. It trades about -0.05 of its total potential returns per unit of risk. Burlington Stores is currently generating about -0.02 per unit of volatility. If you would invest 29,166 in Burlington Stores on September 25, 2024 and sell it today you would lose (262.00) from holding Burlington Stores or give up 0.9% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Industria de Diseo vs. Burlington Stores
Performance |
Timeline |
Industria de Diseo |
Burlington Stores |
Industria and Burlington Stores Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Industria and Burlington Stores
The main advantage of trading using opposite Industria and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industria 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.Industria vs. Fast Retailing Co | Industria vs. The TJX Companies | Industria vs. Ross Stores | Industria vs. Urban Outfitters |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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