Correlation Between FORWARD AIR and Burlington Stores

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

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

Diversification Opportunities for FORWARD AIR and Burlington Stores

-0.27

Correlation Coefficient

FORWARD AIR  Burlington Stores

Very good diversification

The 3 months correlation between FORWARD and Burlington is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and FORWARD AIR 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 FORWARD AIR P 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 FORWARD AIR i.e., FORWARD AIR and Burlington Stores go up and down completely randomly.

Pair Corralation between FORWARD AIR and Burlington Stores

Assuming the 90 days horizon FORWARD AIR P is expected to under-perform the Burlington Stores. In addition to that, FORWARD AIR is 2.45 times more volatile than Burlington Stores. It trades about -0.08 of its total potential returns per unit of risk. Burlington Stores is currently generating about 0.19 per unit of volatility. If you would invest  23,400  in Burlington Stores on September 26, 2024 and sell it today you would earn a total of  3,800  from holding Burlington Stores or generate 16.24% return on investment over 90 days.

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

FORWARD AIR P  vs.  Burlington Stores

FORWARD AIR P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FORWARD AIR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Burlington Stores

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Burlington Stores are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Burlington Stores unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FORWARD AIR and Burlington Stores

The main advantage of trading using opposite FORWARD AIR and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORWARD AIR 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 FORWARD AIR P 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.