Correlation Between Brightsphere Investment and Burford Capital
Can any of the company-specific risk be diversified away by investing in both Brightsphere Investment and Burford Capital 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 Brightsphere Investment and Burford Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brightsphere Investment Group and Burford Capital, you can compare the effects of market volatilities on Brightsphere Investment and Burford Capital 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 Brightsphere Investment with a short position of Burford Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brightsphere Investment and Burford Capital.
Diversification Opportunities for Brightsphere Investment and Burford Capital
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brightsphere and Burford is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Brightsphere Investment Group and Burford Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burford Capital and Brightsphere Investment 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 Brightsphere Investment Group are associated (or correlated) with Burford Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burford Capital has no effect on the direction of Brightsphere Investment i.e., Brightsphere Investment and Burford Capital go up and down completely randomly.
Pair Corralation between Brightsphere Investment and Burford Capital
Given the investment horizon of 90 days Brightsphere Investment Group is expected to generate 0.81 times more return on investment than Burford Capital. However, Brightsphere Investment Group is 1.24 times less risky than Burford Capital. It trades about 0.06 of its potential returns per unit of risk. Burford Capital is currently generating about 0.01 per unit of risk. If you would invest 2,235 in Brightsphere Investment Group on August 29, 2024 and sell it today you would earn a total of 889.00 from holding Brightsphere Investment Group or generate 39.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brightsphere Investment Group vs. Burford Capital
Performance |
| Timeline |
| Brightsphere Investment |
| Burford Capital |
Brightsphere Investment and Burford Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brightsphere Investment and Burford Capital
The main advantage of trading using opposite Brightsphere Investment and Burford Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brightsphere Investment position performs unexpectedly, Burford Capital 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 Burford Capital will offset losses from the drop in Burford Capital's long position.| Brightsphere Investment vs. Aurora Innovation | Brightsphere Investment vs. HUMANA INC | Brightsphere Investment vs. Aquagold International | Brightsphere Investment vs. Barloworld Ltd ADR |
| Burford Capital vs. Brightsphere Investment Group | Burford Capital vs. Franklin Templeton Limited | Burford Capital vs. Blackrock Muni Intermediate | Burford Capital vs. Munivest Fund |
Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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