Correlation Between Sqs Software and BURLINGTON STORES

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

By analyzing existing cross correlation between Sqs Software Quality and BURLINGTON STORES, you can compare the effects of market volatilities on Sqs Software 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 Sqs Software with a short position of BURLINGTON STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sqs Software and BURLINGTON STORES.

Diversification Opportunities for Sqs Software and BURLINGTON STORES

-0.65

Correlation Coefficient

Sqs Software  BURLINGTON STORES

Excellent diversification

The 3 months correlation between Sqs and BURLINGTON is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sqs Software Quality and BURLINGTON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BURLINGTON STORES and Sqs Software 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 Sqs Software Quality 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 Sqs Software i.e., Sqs Software and BURLINGTON STORES go up and down completely randomly.

Pair Corralation between Sqs Software and BURLINGTON STORES

Assuming the 90 days trading horizon Sqs Software Quality is expected to under-perform the BURLINGTON STORES. In addition to that, Sqs Software is 1.52 times more volatile than BURLINGTON STORES. It trades about -0.16 of its total potential returns per unit of risk. BURLINGTON STORES is currently generating about 0.09 per unit of volatility. If you would invest  23,800  in BURLINGTON STORES on September 4, 2024 and sell it today you would earn a total of  2,800  from holding BURLINGTON STORES or generate 11.76% return on investment over 90 days.

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

Sqs Software Quality  vs.  BURLINGTON STORES

Sqs Software Quality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sqs Software Quality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BURLINGTON STORES

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BURLINGTON STORES are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, BURLINGTON STORES may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sqs Software and BURLINGTON STORES

The main advantage of trading using opposite Sqs Software and BURLINGTON STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sqs Software 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's long position.

The idea behind Sqs Software Quality 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.