Correlation Between BURLINGTON STORES and UNIVERSAL DISPLAY

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

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

Diversification Opportunities for BURLINGTON STORES and UNIVERSAL DISPLAY

0.27

Correlation Coefficient

BURLINGTON STORES  UNIVERSAL DISPLAY

Modest diversification

The 3 months correlation between BURLINGTON and UNIVERSAL is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and UNIVERSAL DISPLAY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVERSAL DISPLAY 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 UNIVERSAL DISPLAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVERSAL DISPLAY has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and UNIVERSAL DISPLAY go up and down completely randomly.

Pair Corralation between BURLINGTON STORES and UNIVERSAL DISPLAY

Assuming the 90 days trading horizon BURLINGTON STORES is expected to under-perform the UNIVERSAL DISPLAY. In addition to that, BURLINGTON STORES is 1.16 times more volatile than UNIVERSAL DISPLAY. It trades about -0.16 of its total potential returns per unit of risk. UNIVERSAL DISPLAY is currently generating about 0.02 per unit of volatility. If you would invest  14,192  in UNIVERSAL DISPLAY on December 25, 2024 and sell it today you would earn a total of  103.00  from holding UNIVERSAL DISPLAY or generate 0.73% 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.  UNIVERSAL DISPLAY

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.

UNIVERSAL DISPLAY

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UNIVERSAL DISPLAY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, UNIVERSAL DISPLAY is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BURLINGTON STORES and UNIVERSAL DISPLAY

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

The idea behind BURLINGTON STORES and UNIVERSAL DISPLAY 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.