Correlation Between BURLINGTON STORES and SEALED AIR

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

By analyzing existing cross correlation between BURLINGTON STORES and SEALED AIR , you can compare the effects of market volatilities on BURLINGTON STORES and SEALED AIR 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 SEALED AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and SEALED AIR.

Diversification Opportunities for BURLINGTON STORES and SEALED AIR

0.22

Correlation Coefficient

BURLINGTON STORES  SEALED AIR

Modest diversification

The 3 months correlation between BURLINGTON and SEALED is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and SEALED AIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALED AIR 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 SEALED AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEALED AIR has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and SEALED AIR go up and down completely randomly.

Pair Corralation between BURLINGTON STORES and SEALED AIR

Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 1.21 times more return on investment than SEALED AIR. However, BURLINGTON STORES is 1.21 times more volatile than SEALED AIR . It trades about 0.1 of its potential returns per unit of risk. SEALED AIR is currently generating about 0.09 per unit of risk. If you would invest  24,200  in BURLINGTON STORES on August 31, 2024 and sell it today you would earn a total of  3,000  from holding BURLINGTON STORES or generate 12.4% return on investment over 90 days.

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

BURLINGTON STORES  vs.  SEALED AIR

BURLINGTON STORES

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BURLINGTON STORES are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward indicators, BURLINGTON STORES exhibited solid returns over the last few months and may actually be approaching a breakup point.

SEALED AIR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SEALED AIR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SEALED AIR may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with BURLINGTON STORES and SEALED AIR

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

The idea behind BURLINGTON STORES and SEALED AIR 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.