Correlation Between Mastercard Incorporated and Burlington Stores,

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

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

Diversification Opportunities for Mastercard Incorporated and Burlington Stores,

0.72

Correlation Coefficient

Mastercard Incorporated  Burlington Stores,

Poor diversification

The 3 months correlation between Mastercard and Burlington is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard Incorporated and Burlington Stores, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores, and Mastercard Incorporated 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 Mastercard Incorporated 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 Mastercard Incorporated i.e., Mastercard Incorporated and Burlington Stores, go up and down completely randomly.

Pair Corralation between Mastercard Incorporated and Burlington Stores,

Assuming the 90 days trading horizon Mastercard Incorporated is expected to generate 2.33 times less return on investment than Burlington Stores,. But when comparing it to its historical volatility, Mastercard Incorporated is 3.4 times less risky than Burlington Stores,. It trades about 0.12 of its potential returns per unit of risk. Burlington Stores, is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,460  in Burlington Stores, on October 4, 2024 and sell it today you would earn a total of  3,540  from holding Burlington Stores, or generate 143.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	84.99%
Values	Daily Returns

Mastercard Incorporated  vs.  Burlington Stores,

Mastercard Incorporated

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard Incorporated are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Mastercard Incorporated sustained solid returns over the last few months and may actually be approaching a breakup point.

Burlington Stores,

Risk-Adjusted Performance

11 of 100

Good

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 somewhat weak basic indicators, Burlington Stores, sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mastercard Incorporated and Burlington Stores,

The main advantage of trading using opposite Mastercard Incorporated and Burlington Stores, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard Incorporated 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,'s long position.

The idea behind Mastercard Incorporated 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.