Correlation Between Green River and Burlington Stores

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

By analyzing existing cross correlation between Green River Gold and Burlington Stores, you can compare the effects of market volatilities on Green River and Burlington Stores 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 Green River with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green River and Burlington Stores.

Diversification Opportunities for Green River and Burlington Stores

-0.44

Correlation Coefficient

Green River  Burlington Stores

Very good diversification

The 3 months correlation between Green and Burlington is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Green River Gold and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Green River 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 Green River Gold are associated (or correlated) with Burlington Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burlington Stores has no effect on the direction of Green River i.e., Green River and Burlington Stores go up and down completely randomly.

Pair Corralation between Green River and Burlington Stores

Assuming the 90 days horizon Green River Gold is expected to generate 7.39 times more return on investment than Burlington Stores. However, Green River is 7.39 times more volatile than Burlington Stores. It trades about 0.03 of its potential returns per unit of risk. Burlington Stores is currently generating about 0.03 per unit of risk. If you would invest  6.00  in Green River Gold on October 5, 2024 and sell it today you would lose (5.42) from holding Green River Gold or give up 90.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Green River Gold  vs.  Burlington Stores

Green River Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Green River Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Burlington Stores

Risk-Adjusted Performance

11 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Burlington Stores are ranked lower than 11 (%) 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.

Pair Trading with Green River and Burlington Stores

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

The idea behind Green River Gold and Burlington Stores 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.