Correlation Between Burlington Stores, and Live Nation

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

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

Diversification Opportunities for Burlington Stores, and Live Nation

0.67

Correlation Coefficient

Burlington Stores,  Live Nation

Poor diversification

The 3 months correlation between Burlington and Live is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores, and Live Nation Entertainment, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertai and Burlington Stores, 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 Burlington Stores, are associated (or correlated) with Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertai has no effect on the direction of Burlington Stores, i.e., Burlington Stores, and Live Nation go up and down completely randomly.

Pair Corralation between Burlington Stores, and Live Nation

Assuming the 90 days trading horizon Burlington Stores, is expected to generate 1.39 times less return on investment than Live Nation. In addition to that, Burlington Stores, is 1.26 times more volatile than Live Nation Entertainment,. It trades about 0.14 of its total potential returns per unit of risk. Live Nation Entertainment, is currently generating about 0.24 per unit of volatility. If you would invest  12,178  in Live Nation Entertainment, on October 5, 2024 and sell it today you would earn a total of  3,534  from holding Live Nation Entertainment, or generate 29.02% return on investment over 90 days.

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

Burlington Stores,  vs.  Live Nation Entertainment,

Burlington Stores,

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Burlington Stores, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Burlington Stores, sustained solid returns over the last few months and may actually be approaching a breakup point.

Live Nation Entertai

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment, are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Live Nation sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Burlington Stores, and Live Nation

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

The idea behind Burlington Stores, and Live Nation Entertainment, 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.