Correlation Between Burlington Stores and Lmp Automotive

Can any of the company-specific risk be diversified away by investing in both Burlington Stores and Lmp Automotive 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 Lmp Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Burlington Stores and Lmp Automotive Holdings, you can compare the effects of market volatilities on Burlington Stores and Lmp Automotive 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 Lmp Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burlington Stores and Lmp Automotive.

Diversification Opportunities for Burlington Stores and Lmp Automotive

-0.28

Correlation Coefficient

Burlington Stores  Lmp Automotive

Very good diversification

The 3 months correlation between Burlington and Lmp is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Lmp Automotive Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lmp Automotive 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 Lmp Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lmp Automotive Holdings has no effect on the direction of Burlington Stores i.e., Burlington Stores and Lmp Automotive go up and down completely randomly.

Pair Corralation between Burlington Stores and Lmp Automotive

If you would invest  18,531  in Burlington Stores on January 20, 2024 and sell it today you would lose (602.00) from holding Burlington Stores or give up 3.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.4%
Values	Daily Returns

Burlington Stores  vs.  Lmp Automotive Holdings

Burlington Stores

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Burlington Stores has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Lmp Automotive Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lmp Automotive Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Lmp Automotive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Burlington Stores and Lmp Automotive

The main advantage of trading using opposite Burlington Stores and Lmp Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burlington Stores position performs unexpectedly, Lmp Automotive 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 Lmp Automotive will offset losses from the drop in Lmp Automotive's long position.

The idea behind Burlington Stores and Lmp Automotive Holdings 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.