Correlation Between Burlington Stores and Tillys

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Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Tillys 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 Tillys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Tillys Inc, you can compare the effects of market volatilities on Burlington Stores and Tillys 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 Tillys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Tillys.

Diversification Opportunities for Burlington Stores and Tillys

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between Burlington and Tillys is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Tillys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tillys 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 Tillys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tillys Inc has no effect on the direction of Burlington Stores i.e., Burlington Stores and Tillys go up and down completely randomly.

Pair Corralation between Burlington Stores and Tillys

Given the investment horizon of 90 days Burlington Stores is expected to generate 0.38 times more return on investment than Tillys. However, Burlington Stores is 2.65 times less risky than Tillys. It trades about -0.06 of its potential returns per unit of risk. Tillys Inc is currently generating about -0.23 per unit of risk. If you would invest  29,166  in Burlington Stores on September 24, 2024 and sell it today you would lose (641.00) from holding Burlington Stores or give up 2.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Burlington Stores  vs.  Tillys Inc

 Performance 
       Timeline  
Burlington Stores 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
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.
Tillys Inc 

Risk-Adjusted Performance

0 of 100

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

Burlington Stores and Tillys Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Burlington Stores and Tillys

The main advantage of trading using opposite Burlington Stores and Tillys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Tillys 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 Tillys will offset losses from the drop in Tillys' long position.
The idea behind Burlington Stores and Tillys 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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