Correlation Between Regional Management and Burford Capital
Can any of the company-specific risk be diversified away by investing in both Regional Management 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 Regional Management and Burford Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Management Corp and Burford Capital, you can compare the effects of market volatilities on Regional Management 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 Regional Management with a short position of Burford Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and Burford Capital.
Diversification Opportunities for Regional Management and Burford Capital
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Regional and Burford is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and Burford Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burford Capital and Regional Management 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 Regional Management Corp 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 Regional Management i.e., Regional Management and Burford Capital go up and down completely randomly.
Pair Corralation between Regional Management and Burford Capital
Allowing for the 90-day total investment horizon Regional Management Corp is expected to under-perform the Burford Capital. In addition to that, Regional Management is 1.37 times more volatile than Burford Capital. It trades about -0.01 of its total potential returns per unit of risk. Burford Capital is currently generating about 0.04 per unit of volatility. If you would invest 1,325 in Burford Capital on August 28, 2024 and sell it today you would earn a total of 43.00 from holding Burford Capital or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Management Corp vs. Burford Capital
Performance |
| Timeline |
| Regional Management Corp |
| Burford Capital |
Regional Management and Burford Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and Burford Capital
The main advantage of trading using opposite Regional Management and Burford Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management 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.| Regional Management vs. SLM Corp Pb | Regional Management vs. FirstCash | Regional Management vs. Navient Corp | Regional Management vs. Orix Corp Ads |
| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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