Correlation Between Burlington Stores and Cumulus Media

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

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

Diversification Opportunities for Burlington Stores and Cumulus Media

-0.77

Correlation Coefficient

Burlington Stores  Cumulus Media

Pay attention - limited upside

The 3 months correlation between Burlington and Cumulus is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Cumulus Media Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumulus Media Class 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 Cumulus Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumulus Media Class has no effect on the direction of Burlington Stores i.e., Burlington Stores and Cumulus Media go up and down completely randomly.

Pair Corralation between Burlington Stores and Cumulus Media

Given the investment horizon of 90 days Burlington Stores is expected to under-perform the Cumulus Media. But the stock apears to be less risky and, when comparing its historical volatility, Burlington Stores is 2.76 times less risky than Cumulus Media. The stock trades about -0.09 of its potential returns per unit of risk. The Cumulus Media Class is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  79.00  in Cumulus Media Class on October 12, 2024 and sell it today you would earn a total of  10.00  from holding Cumulus Media Class or generate 12.66% 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.  Cumulus Media Class

Burlington Stores

Risk-Adjusted Performance

10 of 100

OK

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

Cumulus Media Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cumulus Media Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Burlington Stores and Cumulus Media

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

The idea behind Burlington Stores and Cumulus Media Class 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 Anywhere module to track or share privately all of your investments from the convenience of any device.