Correlation Between Burlington Stores and SOLSTAD OFFSHORE

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

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

Diversification Opportunities for Burlington Stores and SOLSTAD OFFSHORE

0.89

Correlation Coefficient

Burlington Stores  SOLSTAD OFFSHORE

Very poor diversification

The 3 months correlation between Burlington and SOLSTAD is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and SOLSTAD OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOLSTAD OFFSHORE has no effect on the direction of Burlington Stores i.e., Burlington Stores and SOLSTAD OFFSHORE go up and down completely randomly.

Pair Corralation between Burlington Stores and SOLSTAD OFFSHORE

Assuming the 90 days trading horizon Burlington Stores is expected to generate 0.73 times more return on investment than SOLSTAD OFFSHORE. However, Burlington Stores is 1.36 times less risky than SOLSTAD OFFSHORE. It trades about 0.11 of its potential returns per unit of risk. SOLSTAD OFFSHORE NK is currently generating about 0.02 per unit of risk. If you would invest  27,200  in Burlington Stores on October 22, 2024 and sell it today you would earn a total of  800.00  from holding Burlington Stores or generate 2.94% return on investment over 90 days.

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

Burlington Stores  vs.  SOLSTAD OFFSHORE NK

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.

SOLSTAD OFFSHORE

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SOLSTAD OFFSHORE NK are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SOLSTAD OFFSHORE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Burlington Stores and SOLSTAD OFFSHORE

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

The idea behind Burlington Stores and SOLSTAD OFFSHORE NK 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.