Correlation Between Delta Air and Burlington Stores

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

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

Diversification Opportunities for Delta Air and Burlington Stores

-0.35

Correlation Coefficient

Delta Air  Burlington Stores

Very good diversification

The 3 months correlation between Delta and Burlington is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores and Delta Air 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 Delta Air Lines 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 Delta Air i.e., Delta Air and Burlington Stores go up and down completely randomly.

Pair Corralation between Delta Air and Burlington Stores

Assuming the 90 days trading horizon Delta Air is expected to generate 1.03 times less return on investment than Burlington Stores. But when comparing it to its historical volatility, Delta Air Lines is 1.48 times less risky than Burlington Stores. It trades about 0.02 of its potential returns per unit of risk. Burlington Stores is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  434,000  in Burlington Stores on April 11, 2025 and sell it today you would lose (1,000.00) from holding Burlington Stores or give up 0.23% of portfolio value over 90 days.

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

Delta Air Lines  vs.  Burlington Stores

Delta Air Lines

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Delta Air showed solid returns over the last few months and may actually be approaching a breakup point.

Burlington Stores

Risk-Adjusted Performance

Very Weak

Over the last 90 days Burlington Stores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Delta Air and Burlington Stores

The main advantage of trading using opposite Delta Air and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air 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 Delta Air Lines 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.