Correlation Between Genesco and Burlington Stores

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

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

Diversification Opportunities for Genesco and Burlington Stores

0.76

Correlation Coefficient

Genesco  Burlington Stores

Poor diversification

The 3 months correlation between Genesco and Burlington is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Genesco and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Genesco 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 Genesco 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 Genesco i.e., Genesco and Burlington Stores go up and down completely randomly.

Pair Corralation between Genesco and Burlington Stores

Considering the 90-day investment horizon Genesco is expected to under-perform the Burlington Stores. In addition to that, Genesco is 1.53 times more volatile than Burlington Stores. It trades about -0.25 of its total potential returns per unit of risk. Burlington Stores is currently generating about -0.09 per unit of volatility. If you would invest  28,480  in Burlington Stores on December 30, 2024 and sell it today you would lose (4,713) from holding Burlington Stores or give up 16.55% of portfolio value over 90 days.

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

Genesco  vs.  Burlington Stores

Genesco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genesco 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 fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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.

Pair Trading with Genesco and Burlington Stores

The main advantage of trading using opposite Genesco and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genesco 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 Genesco 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.