Correlation Between BURLINGTON STORES and Cheniere Energy

Can any of the company-specific risk be diversified away by investing in both BURLINGTON STORES and Cheniere 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 Cheniere 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 Cheniere Energy, you can compare the effects of market volatilities on BURLINGTON STORES and Cheniere 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 Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and Cheniere Energy.

Diversification Opportunities for BURLINGTON STORES and Cheniere Energy

0.54

Correlation Coefficient

BURLINGTON STORES  Cheniere Energy

Very weak diversification

The 3 months correlation between BURLINGTON and Cheniere is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and Cheniere Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere 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 Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and Cheniere Energy go up and down completely randomly.

Pair Corralation between BURLINGTON STORES and Cheniere Energy

Assuming the 90 days trading horizon BURLINGTON STORES is expected to under-perform the Cheniere Energy. In addition to that, BURLINGTON STORES is 1.13 times more volatile than Cheniere Energy. It trades about -0.16 of its total potential returns per unit of risk. Cheniere Energy is currently generating about 0.04 per unit of volatility. If you would invest  20,045  in Cheniere Energy on December 25, 2024 and sell it today you would earn a total of  905.00  from holding Cheniere Energy or generate 4.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

BURLINGTON STORES  vs.  Cheniere Energy

BURLINGTON STORES

Risk-Adjusted Performance

Very Weak

Over the last 90 days BURLINGTON STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Cheniere Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Cheniere Energy is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BURLINGTON STORES and Cheniere Energy

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

The idea behind BURLINGTON STORES and Cheniere 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.