Correlation Between Express and Burlington Stores

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

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

Diversification Opportunities for Express and Burlington Stores

0.69

Correlation Coefficient

Express  Burlington Stores

Poor diversification

The 3 months correlation between Express and Burlington is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Express and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Express 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 Express 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 Express i.e., Express and Burlington Stores go up and down completely randomly.

Pair Corralation between Express and Burlington Stores

If you would invest  26,824  in Burlington Stores on August 30, 2024 and sell it today you would earn a total of  2,012  from holding Burlington Stores or generate 7.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Express  vs.  Burlington Stores

Express

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Express has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Express is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Burlington Stores

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Burlington Stores are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Burlington Stores may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Express and Burlington Stores

The main advantage of trading using opposite Express and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Express 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 Express 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.