Correlation Between BURLINGTON STORES and S A P

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

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

Diversification Opportunities for BURLINGTON STORES and S A P

-0.55

Correlation Coefficient

BURLINGTON STORES  S A P

Excellent diversification

The 3 months correlation between BURLINGTON and SAP is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE 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 S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and S A P go up and down completely randomly.

Pair Corralation between BURLINGTON STORES and S A P

Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 1.34 times more return on investment than S A P. However, BURLINGTON STORES is 1.34 times more volatile than SAP SE. It trades about 0.11 of its potential returns per unit of risk. SAP SE is currently generating about -0.13 per unit of risk. If you would invest  20,600  in BURLINGTON STORES on May 26, 2025 and sell it today you would earn a total of  2,800  from holding BURLINGTON STORES or generate 13.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BURLINGTON STORES  vs.  SAP SE

BURLINGTON STORES

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in BURLINGTON STORES are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, BURLINGTON STORES exhibited solid returns over the last few months and may actually be approaching a breakup point.

SAP SE

Risk-Adjusted Performance

Weakest

Over the last 90 days SAP SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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 S A P

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

The idea behind BURLINGTON STORES and SAP SE 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 Transaction History module to view history of all your transactions and understand their impact on performance.