Correlation Between ACCO BRANDS and Burlington Stores

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

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

Diversification Opportunities for ACCO BRANDS and Burlington Stores

0.53

Correlation Coefficient

ACCO BRANDS  Burlington Stores

Very weak diversification

The 3 months correlation between ACCO and Burlington is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding ACCO BRANDS and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and ACCO BRANDS 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 ACCO BRANDS 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 ACCO BRANDS i.e., ACCO BRANDS and Burlington Stores go up and down completely randomly.

Pair Corralation between ACCO BRANDS and Burlington Stores

Assuming the 90 days trading horizon ACCO BRANDS is expected to under-perform the Burlington Stores. But the stock apears to be less risky and, when comparing its historical volatility, ACCO BRANDS is 1.47 times less risky than Burlington Stores. The stock trades about -0.64 of its potential returns per unit of risk. The Burlington Stores is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  28,200  in Burlington Stores on October 12, 2024 and sell it today you would lose (600.00) from holding Burlington Stores or give up 2.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

ACCO BRANDS  vs.  Burlington Stores

ACCO BRANDS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ACCO BRANDS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, ACCO BRANDS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Burlington Stores

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Burlington Stores are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Burlington Stores unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ACCO BRANDS and Burlington Stores

The main advantage of trading using opposite ACCO BRANDS and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACCO BRANDS 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.

The idea behind ACCO BRANDS 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.