Correlation Between Burlington Stores and Lululemon Athletica
Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Lululemon Athletica 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 Lululemon Athletica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burlington Stores and Lululemon Athletica, you can compare the effects of market volatilities on Burlington Stores and Lululemon Athletica 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 Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Lululemon Athletica.
Diversification Opportunities for Burlington Stores and Lululemon Athletica
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Burlington and Lululemon is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica 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 Lululemon Athletica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lululemon Athletica has no effect on the direction of Burlington Stores i.e., Burlington Stores and Lululemon Athletica go up and down completely randomly.
Pair Corralation between Burlington Stores and Lululemon Athletica
Given the investment horizon of 90 days Burlington Stores is expected to generate 1.08 times more return on investment than Lululemon Athletica. However, Burlington Stores is 1.08 times more volatile than Lululemon Athletica. It trades about 0.04 of its potential returns per unit of risk. Lululemon Athletica is currently generating about 0.0 per unit of risk. If you would invest 19,965 in Burlington Stores on August 27, 2024 and sell it today you would earn a total of 8,652 from holding Burlington Stores or generate 43.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burlington Stores vs. Lululemon Athletica
Performance |
| Timeline |
| Burlington Stores |
| Lululemon Athletica |
Burlington Stores and Lululemon Athletica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burlington Stores and Lululemon Athletica
The main advantage of trading using opposite Burlington Stores and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Lululemon Athletica 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 Lululemon Athletica will offset losses from the drop in Lululemon Athletica's long position.| Burlington Stores vs. The TJX Companies | Burlington Stores vs. Guess Inc | Burlington Stores vs. Urban Outfitters | Burlington Stores vs. Childrens Place |
| Lululemon Athletica vs. VF Corporation | Lululemon Athletica vs. Levi Strauss Co | Lululemon Athletica vs. Under Armour A | Lululemon Athletica vs. Oxford Industries |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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