Correlation Between ASPEN TECHINC and BURLINGTON STORES

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

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

Diversification Opportunities for ASPEN TECHINC and BURLINGTON STORES

0.92

Correlation Coefficient

ASPEN TECHINC  BURLINGTON STORES

Almost no diversification

The 3 months correlation between ASPEN and BURLINGTON is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding ASPEN TECHINC DL and BURLINGTON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BURLINGTON STORES and ASPEN TECHINC 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 ASPEN TECHINC DL 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 ASPEN TECHINC i.e., ASPEN TECHINC and BURLINGTON STORES go up and down completely randomly.

Pair Corralation between ASPEN TECHINC and BURLINGTON STORES

Assuming the 90 days horizon ASPEN TECHINC DL is expected to generate 0.39 times more return on investment than BURLINGTON STORES. However, ASPEN TECHINC DL is 2.56 times less risky than BURLINGTON STORES. It trades about 0.29 of its potential returns per unit of risk. BURLINGTON STORES is currently generating about 0.1 per unit of risk. If you would invest  23,600  in ASPEN TECHINC DL on October 22, 2024 and sell it today you would earn a total of  600.00  from holding ASPEN TECHINC DL or generate 2.54% return on investment over 90 days.

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

ASPEN TECHINC DL  vs.  BURLINGTON STORES

ASPEN TECHINC DL

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASPEN TECHINC DL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ASPEN TECHINC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BURLINGTON STORES

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BURLINGTON STORES are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward indicators, BURLINGTON STORES exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASPEN TECHINC and BURLINGTON STORES

The main advantage of trading using opposite ASPEN TECHINC and BURLINGTON STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASPEN TECHINC 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 ASPEN TECHINC DL 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.