Correlation Between Burlington Stores and AstraZeneca PLC

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

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

Diversification Opportunities for Burlington Stores and AstraZeneca PLC

-0.42

Correlation Coefficient

Burlington Stores  AstraZeneca PLC

Very good diversification

The 3 months correlation between Burlington and AstraZeneca is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC 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 AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC has no effect on the direction of Burlington Stores i.e., Burlington Stores and AstraZeneca PLC go up and down completely randomly.

Pair Corralation between Burlington Stores and AstraZeneca PLC

Assuming the 90 days trading horizon Burlington Stores is expected to generate 1.9 times less return on investment than AstraZeneca PLC. In addition to that, Burlington Stores is 1.86 times more volatile than AstraZeneca PLC. It trades about 0.03 of its total potential returns per unit of risk. AstraZeneca PLC is currently generating about 0.11 per unit of volatility. If you would invest  12,695  in AstraZeneca PLC on October 5, 2024 and sell it today you would earn a total of  240.00  from holding AstraZeneca PLC or generate 1.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

Burlington Stores  vs.  AstraZeneca PLC

Burlington Stores

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Burlington Stores has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

AstraZeneca PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AstraZeneca PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Burlington Stores and AstraZeneca PLC

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

The idea behind Burlington Stores and AstraZeneca PLC 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.

Check out your portfolio center.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.