Correlation Between Burlington Stores, and Valero Energy

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

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

Diversification Opportunities for Burlington Stores, and Valero Energy

0.02

Correlation Coefficient

Burlington Stores,  Valero Energy

Significant diversification

The 3 months correlation between Burlington and Valero is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores, and Valero Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valero Energy 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 Valero Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valero Energy has no effect on the direction of Burlington Stores, i.e., Burlington Stores, and Valero Energy go up and down completely randomly.

Pair Corralation between Burlington Stores, and Valero Energy

Assuming the 90 days trading horizon Burlington Stores, is expected to generate 1.4 times more return on investment than Valero Energy. However, Burlington Stores, is 1.4 times more volatile than Valero Energy. It trades about 0.13 of its potential returns per unit of risk. Valero Energy is currently generating about 0.12 per unit of risk. If you would invest  4,855  in Burlington Stores, on October 26, 2024 and sell it today you would earn a total of  899.00  from holding Burlington Stores, or generate 18.52% return on investment over 90 days.

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

Burlington Stores,  vs.  Valero Energy

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.

Valero Energy

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Valero Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Valero Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Burlington Stores, and Valero Energy

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

The idea behind Burlington Stores, and Valero Energy 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.