Correlation Between Tillys and Burlington Stores

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

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

Diversification Opportunities for Tillys and Burlington Stores

-0.34

Correlation Coefficient

Tillys  Burlington Stores

Very good diversification

The 3 months correlation between Tillys and Burlington is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Tillys Inc and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Tillys 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 Tillys Inc 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 Tillys i.e., Tillys and Burlington Stores go up and down completely randomly.

Pair Corralation between Tillys and Burlington Stores

Given the investment horizon of 90 days Tillys is expected to generate 15.42 times less return on investment than Burlington Stores. In addition to that, Tillys is 2.45 times more volatile than Burlington Stores. It trades about 0.0 of its total potential returns per unit of risk. Burlington Stores is currently generating about 0.14 per unit of volatility. If you would invest  25,120  in Burlington Stores on October 12, 2024 and sell it today you would earn a total of  3,586  from holding Burlington Stores or generate 14.28% return on investment over 90 days.

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

Tillys Inc  vs.  Burlington Stores

Tillys Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Burlington Stores

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Burlington Stores are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Burlington Stores disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tillys and Burlington Stores

The main advantage of trading using opposite Tillys and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tillys 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 Tillys Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.