Correlation Between Burlington Stores and TROPHY GAMES

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

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

Diversification Opportunities for Burlington Stores and TROPHY GAMES

-0.76

Correlation Coefficient

Burlington Stores  TROPHY GAMES

Pay attention - limited upside

The 3 months correlation between Burlington and TROPHY is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and TROPHY GAMES DEV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TROPHY GAMES DEV 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 TROPHY GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TROPHY GAMES DEV has no effect on the direction of Burlington Stores i.e., Burlington Stores and TROPHY GAMES go up and down completely randomly.

Pair Corralation between Burlington Stores and TROPHY GAMES

Assuming the 90 days trading horizon Burlington Stores is expected to generate 3.5 times less return on investment than TROPHY GAMES. But when comparing it to its historical volatility, Burlington Stores is 1.33 times less risky than TROPHY GAMES. It trades about 0.11 of its potential returns per unit of risk. TROPHY GAMES DEV is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  81.00  in TROPHY GAMES DEV on October 22, 2024 and sell it today you would earn a total of  9.00  from holding TROPHY GAMES DEV or generate 11.11% return on investment over 90 days.

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

Burlington Stores  vs.  TROPHY GAMES DEV

Burlington Stores

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Burlington Stores are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Burlington Stores unveiled solid returns over the last few months and may actually be approaching a breakup point.

TROPHY GAMES DEV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TROPHY GAMES DEV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Burlington Stores and TROPHY GAMES

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

The idea behind Burlington Stores and TROPHY GAMES DEV 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..