Correlation Between BURLINGTON STORES and FORMPIPE SOFTWARE

Can any of the company-specific risk be diversified away by investing in both BURLINGTON STORES and FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BURLINGTON STORES and FORMPIPE SOFTWARE AB, you can compare the effects of market volatilities on BURLINGTON STORES and FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and FORMPIPE SOFTWARE.

Diversification Opportunities for BURLINGTON STORES and FORMPIPE SOFTWARE

-0.23

Correlation Coefficient

BURLINGTON STORES  FORMPIPE SOFTWARE

Very good diversification

The 3 months correlation between BURLINGTON and FORMPIPE is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and FORMPIPE SOFTWARE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORMPIPE SOFTWARE has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and FORMPIPE SOFTWARE go up and down completely randomly.

Pair Corralation between BURLINGTON STORES and FORMPIPE SOFTWARE

Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 0.69 times more return on investment than FORMPIPE SOFTWARE. However, BURLINGTON STORES is 1.46 times less risky than FORMPIPE SOFTWARE. It trades about 0.02 of its potential returns per unit of risk. FORMPIPE SOFTWARE AB is currently generating about -0.06 per unit of risk. If you would invest  23,600  in BURLINGTON STORES on August 17, 2025 and sell it today you would earn a total of  400.00  from holding BURLINGTON STORES or generate 1.69% 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.  FORMPIPE SOFTWARE AB

BURLINGTON STORES

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BURLINGTON STORES are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, BURLINGTON STORES is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

FORMPIPE SOFTWARE

Risk-Adjusted Performance

Weakest

Over the last 90 days FORMPIPE SOFTWARE AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating 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.

Pair Trading with BURLINGTON STORES and FORMPIPE SOFTWARE

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

The idea behind BURLINGTON STORES and FORMPIPE SOFTWARE AB 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.