Correlation Between Burford Capital and Roebuck Food
Can any of the company-specific risk be diversified away by investing in both Burford Capital and Roebuck Food 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 Burford Capital and Roebuck Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burford Capital Limited and Roebuck Food Group, you can compare the effects of market volatilities on Burford Capital and Roebuck Food 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 Burford Capital with a short position of Roebuck Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burford Capital and Roebuck Food.
Diversification Opportunities for Burford Capital and Roebuck Food
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Burford and Roebuck is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Burford Capital Limited and Roebuck Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roebuck Food Group and Burford Capital 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 Burford Capital Limited are associated (or correlated) with Roebuck Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roebuck Food Group has no effect on the direction of Burford Capital i.e., Burford Capital and Roebuck Food go up and down completely randomly.
Pair Corralation between Burford Capital and Roebuck Food
Assuming the 90 days trading horizon Burford Capital is expected to generate 1.77 times less return on investment than Roebuck Food. In addition to that, Burford Capital is 1.74 times more volatile than Roebuck Food Group. It trades about 0.03 of its total potential returns per unit of risk. Roebuck Food Group is currently generating about 0.08 per unit of volatility. If you would invest 1,150 in Roebuck Food Group on September 12, 2024 and sell it today you would earn a total of 530.00 from holding Roebuck Food Group or generate 46.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burford Capital Limited vs. Roebuck Food Group
Performance |
| Timeline |
| Burford Capital |
| Roebuck Food Group |
Burford Capital and Roebuck Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burford Capital and Roebuck Food
The main advantage of trading using opposite Burford Capital and Roebuck Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burford Capital position performs unexpectedly, Roebuck Food 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 Roebuck Food will offset losses from the drop in Roebuck Food's long position.| Burford Capital vs. Lundin Mining Corp | Burford Capital vs. Blackrock World Mining | Burford Capital vs. Coor Service Management | Burford Capital vs. Zoom Video Communications |
| Roebuck Food vs. Hong Kong Land | Roebuck Food vs. Neometals | Roebuck Food vs. Coor Service Management | Roebuck Food vs. Fidelity Sustainable USD |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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