Correlation Between Burlington Stores and Air Lease
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Air Lease 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 Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Air Lease, you can compare the effects of market volatilities on Burlington Stores and Air Lease 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 Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Air Lease.
Diversification Opportunities for Burlington Stores and Air Lease
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Burlington and Air is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Burlington Stores i.e., Burlington Stores and Air Lease go up and down completely randomly.
Pair Corralation between Burlington Stores and Air Lease
Given the investment horizon of 90 days Burlington Stores is expected to generate 1.3 times less return on investment than Air Lease. In addition to that, Burlington Stores is 1.11 times more volatile than Air Lease. It trades about 0.12 of its total potential returns per unit of risk. Air Lease is currently generating about 0.17 per unit of volatility. If you would invest 4,054 in Air Lease on September 4, 2024 and sell it today you would earn a total of 1,006 from holding Air Lease or generate 24.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burlington Stores vs. Air Lease
Performance |
| Timeline |
| Burlington Stores |
| Air Lease |
Burlington Stores and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and Air Lease
The main advantage of trading using opposite Burlington Stores and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.| Burlington Stores vs. The TJX Companies | Burlington Stores vs. Guess Inc | Burlington Stores vs. Urban Outfitters | Burlington Stores vs. Childrens Place |
| Air Lease vs. Alta Equipment Group | Air Lease vs. McGrath RentCorp | Air Lease vs. Herc Holdings | Air Lease vs. HE Equipment Services |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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