Correlation Between Burberry Group and Burberry Group

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

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

Diversification Opportunities for Burberry Group and Burberry Group

0.97

Correlation Coefficient

Burberry Group  Burberry Group

Almost no diversification

The 3 months correlation between Burberry and Burberry is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Burberry Group plc and Burberry Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burberry Group Plc and Burberry Group 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 Burberry Group plc are associated (or correlated) with Burberry Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burberry Group Plc has no effect on the direction of Burberry Group i.e., Burberry Group and Burberry Group go up and down completely randomly.

Pair Corralation between Burberry Group and Burberry Group

Assuming the 90 days horizon Burberry Group plc is expected to generate 1.37 times more return on investment than Burberry Group. However, Burberry Group is 1.37 times more volatile than Burberry Group Plc. It trades about 0.21 of its potential returns per unit of risk. Burberry Group Plc is currently generating about 0.2 per unit of risk. If you would invest  1,080  in Burberry Group plc on September 21, 2024 and sell it today you would earn a total of  140.00  from holding Burberry Group plc or generate 12.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Burberry Group plc  vs.  Burberry Group Plc

Burberry Group plc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Burberry Group plc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Burberry Group reported solid returns over the last few months and may actually be approaching a breakup point.

Burberry Group Plc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Burberry Group Plc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Burberry Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Burberry Group and Burberry Group

The main advantage of trading using opposite Burberry Group and Burberry Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burberry Group position performs unexpectedly, Burberry Group 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 Burberry Group will offset losses from the drop in Burberry Group's long position.

The idea behind Burberry Group plc and Burberry Group Plc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.