Correlation Between BURLINGTON STORES and Talanx AG

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

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

Diversification Opportunities for BURLINGTON STORES and Talanx AG

-0.41

Correlation Coefficient

BURLINGTON STORES  Talanx AG

Very good diversification

The 3 months correlation between BURLINGTON and Talanx is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG 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 Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and Talanx AG go up and down completely randomly.

Pair Corralation between BURLINGTON STORES and Talanx AG

Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 2.63 times less return on investment than Talanx AG. In addition to that, BURLINGTON STORES is 1.79 times more volatile than Talanx AG. It trades about 0.02 of its total potential returns per unit of risk. Talanx AG is currently generating about 0.11 per unit of volatility. If you would invest  4,207  in Talanx AG on November 20, 2024 and sell it today you would earn a total of  4,428  from holding Talanx AG or generate 105.25% return on investment over 90 days.

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

BURLINGTON STORES  vs.  Talanx AG

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 latest fragile performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Talanx AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Talanx AG may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with BURLINGTON STORES and Talanx AG

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

The idea behind BURLINGTON STORES and Talanx AG 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.