Correlation Between Burlington Stores and Macys

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

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

Diversification Opportunities for Burlington Stores and Macys

0.61

Correlation Coefficient

Burlington Stores  Macys

Poor diversification

The 3 months correlation between Burlington and Macys is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc 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 Macys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macys Inc has no effect on the direction of Burlington Stores i.e., Burlington Stores and Macys go up and down completely randomly.

Pair Corralation between Burlington Stores and Macys

Given the investment horizon of 90 days Burlington Stores is expected to under-perform the Macys. But the stock apears to be less risky and, when comparing its historical volatility, Burlington Stores is 1.32 times less risky than Macys. The stock trades about 0.0 of its potential returns per unit of risk. The Macys Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,613  in Macys Inc on September 23, 2024 and sell it today you would earn a total of  11.00  from holding Macys Inc or generate 0.68% return on investment over 90 days.

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

Burlington Stores  vs.  Macys Inc

Burlington Stores

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Burlington Stores are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Burlington Stores is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Macys Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Macys may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Burlington Stores and Macys

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

The idea behind Burlington Stores and Macys Inc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.