Correlation Between Burlington Stores, and LPL Financial
Can any of the company-specific risk be diversified away by investing in both Burlington Stores, and LPL Financial 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 Burlington Stores, and LPL Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores, and LPL Financial Holdings, you can compare the effects of market volatilities on Burlington Stores, and LPL Financial 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 Burlington Stores, with a short position of LPL Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores, and LPL Financial.
Diversification Opportunities for Burlington Stores, and LPL Financial
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Burlington and LPL is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores, and LPL Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPL Financial Holdings and Burlington Stores, 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 Burlington Stores, are associated (or correlated) with LPL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPL Financial Holdings has no effect on the direction of Burlington Stores, i.e., Burlington Stores, and LPL Financial go up and down completely randomly.
Pair Corralation between Burlington Stores, and LPL Financial
Assuming the 90 days trading horizon Burlington Stores, is expected to generate 1.57 times more return on investment than LPL Financial. However, Burlington Stores, is 1.57 times more volatile than LPL Financial Holdings. It trades about 0.17 of its potential returns per unit of risk. LPL Financial Holdings is currently generating about 0.2 per unit of risk. If you would invest 4,725 in Burlington Stores, on November 7, 2024 and sell it today you would earn a total of 1,029 from holding Burlington Stores, or generate 21.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Burlington Stores, vs. LPL Financial Holdings
Performance |
| Timeline |
| Burlington Stores, |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| LPL Financial Holdings |
Burlington Stores, and LPL Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores, and LPL Financial
The main advantage of trading using opposite Burlington Stores, and LPL Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores, position performs unexpectedly, LPL Financial 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 LPL Financial will offset losses from the drop in LPL Financial's long position.| Burlington Stores, vs. United Airlines Holdings | Burlington Stores, vs. GP Investments | Burlington Stores, vs. Melco Resorts Entertainment | Burlington Stores, vs. Patria Investments Limited |
| LPL Financial vs. Taiwan Semiconductor Manufacturing | LPL Financial vs. Apple Inc | LPL Financial vs. Alibaba Group Holding | LPL Financial vs. Microsoft |
Check out your portfolio center.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 Correlations module to find global opportunities by holding instruments from different markets.
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