Correlation Between Burlington Stores and Meiwu Technology

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

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

Diversification Opportunities for Burlington Stores and Meiwu Technology

0.68

Correlation Coefficient

Burlington Stores  Meiwu Technology

Poor diversification

The 3 months correlation between Burlington and Meiwu is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Burlington Stores and Meiwu Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiwu Technology 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 Meiwu Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiwu Technology has no effect on the direction of Burlington Stores i.e., Burlington Stores and Meiwu Technology go up and down completely randomly.

Pair Corralation between Burlington Stores and Meiwu Technology

Given the investment horizon of 90 days Burlington Stores is expected to generate 8.82 times less return on investment than Meiwu Technology. But when comparing it to its historical volatility, Burlington Stores is 2.41 times less risky than Meiwu Technology. It trades about 0.07 of its potential returns per unit of risk. Meiwu Technology Co is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  84.00  in Meiwu Technology Co on September 17, 2024 and sell it today you would earn a total of  77.00  from holding Meiwu Technology Co or generate 91.67% return on investment over 90 days.

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

Burlington Stores  vs.  Meiwu Technology Co

Burlington Stores

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Burlington Stores are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Burlington Stores may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Meiwu Technology

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Meiwu Technology Co are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Meiwu Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Burlington Stores and Meiwu Technology

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

The idea behind Burlington Stores and Meiwu Technology Co 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.