Correlation Between Prospect Capital and Burford Capital
Can any of the company-specific risk be diversified away by investing in both Prospect Capital 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 Prospect Capital and Burford Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prospect Capital and Burford Capital, you can compare the effects of market volatilities on Prospect Capital 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 Prospect Capital with a short position of Burford Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prospect Capital and Burford Capital.
Diversification Opportunities for Prospect Capital and Burford Capital
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Prospect and Burford is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Prospect Capital and Burford Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burford Capital and Prospect 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 Prospect Capital 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 Prospect Capital i.e., Prospect Capital and Burford Capital go up and down completely randomly.
Pair Corralation between Prospect Capital and Burford Capital
Assuming the 90 days trading horizon Prospect Capital is expected to generate 1.13 times more return on investment than Burford Capital. However, Prospect Capital is 1.13 times more volatile than Burford Capital. It trades about 0.03 of its potential returns per unit of risk. Burford Capital is currently generating about 0.0 per unit of risk. If you would invest 1,900 in Prospect Capital on August 28, 2024 and sell it today you would earn a total of 31.00 from holding Prospect Capital or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prospect Capital vs. Burford Capital
Performance |
| Timeline |
| Prospect Capital |
| Burford Capital |
Prospect Capital and Burford Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prospect Capital and Burford Capital
The main advantage of trading using opposite Prospect Capital and Burford Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prospect Capital 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.| Prospect Capital vs. PennyMac Mortgage Investment | Prospect Capital vs. SiriusPoint | Prospect Capital vs. Telephone and Data | Prospect Capital vs. ARMOUR Residential REIT |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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