Correlation Between Target and Burlington Stores

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Can any of the company-specific risk be diversified away by investing in both Target 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 Target and Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target and Burlington Stores, you can compare the effects of market volatilities on Target 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 Target with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target and Burlington Stores.

Diversification Opportunities for Target and Burlington Stores

TargetBurlingtonDiversified AwayTargetBurlingtonDiversified Away100%
0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Target and Burlington is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Target and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Target 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 Target 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 Target i.e., Target and Burlington Stores go up and down completely randomly.

Pair Corralation between Target and Burlington Stores

Assuming the 90 days horizon Target is expected to generate 1.06 times more return on investment than Burlington Stores. However, Target is 1.06 times more volatile than Burlington Stores. It trades about -0.11 of its potential returns per unit of risk. Burlington Stores is currently generating about -0.51 per unit of risk. If you would invest  12,731  in Target on November 21, 2024 and sell it today you would lose (529.00) from holding Target or give up 4.16% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Target  vs.  Burlington Stores

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-10010
JavaScript chart by amCharts 3.21.15DYH BUI
       Timeline  
Target 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Target are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Target may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb115120125130135140145
Burlington Stores 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Burlington Stores has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb240250260270280

Target and Burlington Stores Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.45-4.08-2.72-1.35-0.02281.252.543.845.136.42 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15DYH BUI
       Returns  

Pair Trading with Target and Burlington Stores

The main advantage of trading using opposite Target and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target 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 Target 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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