Correlation Between BCB Bancorp and Burlington Stores

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

By analyzing existing cross correlation between BCB Bancorp and Burlington Stores, you can compare the effects of market volatilities on BCB Bancorp 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 BCB Bancorp with a short position of Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCB Bancorp and Burlington Stores.

Diversification Opportunities for BCB Bancorp and Burlington Stores

0.54

Correlation Coefficient

BCB Bancorp  Burlington Stores

Very weak diversification

The 3 months correlation between BCB and Burlington is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BCB Bancorp and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and BCB Bancorp 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 BCB Bancorp 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 BCB Bancorp i.e., BCB Bancorp and Burlington Stores go up and down completely randomly.

Pair Corralation between BCB Bancorp and Burlington Stores

Given the investment horizon of 90 days BCB Bancorp is expected to under-perform the Burlington Stores. In addition to that, BCB Bancorp is 1.44 times more volatile than Burlington Stores. It trades about -0.24 of its total potential returns per unit of risk. Burlington Stores is currently generating about -0.06 per unit of volatility. If you would invest  29,166  in Burlington Stores on September 24, 2024 and sell it today you would lose (641.00) from holding Burlington Stores or give up 2.2% of portfolio value over 90 days.

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

BCB Bancorp  vs.  Burlington Stores

BCB Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BCB Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, BCB Bancorp is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Burlington Stores

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Burlington Stores are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Burlington Stores is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with BCB Bancorp and Burlington Stores

The main advantage of trading using opposite BCB Bancorp and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCB Bancorp 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 BCB Bancorp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.