Correlation Between Burlington Stores and REYNOLDS

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

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

Diversification Opportunities for Burlington Stores and REYNOLDS

0.06

Correlation Coefficient

Burlington Stores  REYNOLDS

Significant diversification

The 3 months correlation between Burlington and REYNOLDS is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and REYNOLDS AMERN INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REYNOLDS AMERN 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 REYNOLDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REYNOLDS AMERN INC has no effect on the direction of Burlington Stores i.e., Burlington Stores and REYNOLDS go up and down completely randomly.

Pair Corralation between Burlington Stores and REYNOLDS

Given the investment horizon of 90 days Burlington Stores is expected to under-perform the REYNOLDS. In addition to that, Burlington Stores is 9.82 times more volatile than REYNOLDS AMERN INC. It trades about -0.13 of its total potential returns per unit of risk. REYNOLDS AMERN INC is currently generating about -0.08 per unit of volatility. If you would invest  9,975  in REYNOLDS AMERN INC on December 3, 2024 and sell it today you would lose (90.00) from holding REYNOLDS AMERN INC or give up 0.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Burlington Stores  vs.  REYNOLDS AMERN INC

Burlington Stores

Risk-Adjusted Performance

Very Weak

Over the last 90 days Burlington Stores has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

REYNOLDS AMERN INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days REYNOLDS AMERN INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, REYNOLDS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Burlington Stores and REYNOLDS

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

The idea behind Burlington Stores and REYNOLDS AMERN 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.