Correlation Between Canada Goose and Burlington Stores

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

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

Diversification Opportunities for Canada Goose and Burlington Stores

-0.42

Correlation Coefficient

Canada Goose  Burlington Stores

Very good diversification

The 3 months correlation between Canada and Burlington is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Canada Goose Holdings and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Canada Goose 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 Canada Goose Holdings 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 Canada Goose i.e., Canada Goose and Burlington Stores go up and down completely randomly.

Pair Corralation between Canada Goose and Burlington Stores

Given the investment horizon of 90 days Canada Goose Holdings is expected to generate 1.13 times more return on investment than Burlington Stores. However, Canada Goose is 1.13 times more volatile than Burlington Stores. It trades about 0.13 of its potential returns per unit of risk. Burlington Stores is currently generating about -0.04 per unit of risk. If you would invest  970.00  in Canada Goose Holdings on September 25, 2024 and sell it today you would earn a total of  44.50  from holding Canada Goose Holdings or generate 4.59% return on investment over 90 days.

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

Canada Goose Holdings  vs.  Burlington Stores

Canada Goose Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canada Goose Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Canada Goose is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Burlington Stores

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Burlington Stores are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Burlington Stores is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Canada Goose and Burlington Stores

The main advantage of trading using opposite Canada Goose and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canada Goose 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 Canada Goose Holdings 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.