Correlation Between Burlington Stores and BRUNELLO C

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

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

Diversification Opportunities for Burlington Stores and BRUNELLO C

0.65

Correlation Coefficient

Burlington Stores  BRUNELLO C

Poor diversification

The 3 months correlation between Burlington and BRUNELLO is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and BRUNELLO C SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRUNELLO C SPA 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 BRUNELLO C. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRUNELLO C SPA has no effect on the direction of Burlington Stores i.e., Burlington Stores and BRUNELLO C go up and down completely randomly.

Pair Corralation between Burlington Stores and BRUNELLO C

Assuming the 90 days trading horizon Burlington Stores is expected to generate 1.26 times less return on investment than BRUNELLO C. In addition to that, Burlington Stores is 1.38 times more volatile than BRUNELLO C SPA. It trades about 0.15 of its total potential returns per unit of risk. BRUNELLO C SPA is currently generating about 0.27 per unit of volatility. If you would invest  9,305  in BRUNELLO C SPA on October 24, 2024 and sell it today you would earn a total of  2,295  from holding BRUNELLO C SPA or generate 24.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Burlington Stores  vs.  BRUNELLO C SPA

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.

BRUNELLO C SPA

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BRUNELLO C SPA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BRUNELLO C unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Burlington Stores and BRUNELLO C

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

The idea behind Burlington Stores and BRUNELLO C SPA 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.