Correlation Between Affiliated Managers and Burford Capital

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Can any of the company-specific risk be diversified away by investing in both Affiliated Managers 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 Affiliated Managers and Burford Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affiliated Managers Group and Burford Capital, you can compare the effects of market volatilities on Affiliated Managers 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 Affiliated Managers with a short position of Burford Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affiliated Managers and Burford Capital.

Diversification Opportunities for Affiliated Managers and Burford Capital

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between Affiliated and Burford is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group and Burford Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burford Capital and Affiliated Managers 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 Affiliated Managers 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 Affiliated Managers i.e., Affiliated Managers and Burford Capital go up and down completely randomly.

Pair Corralation between Affiliated Managers and Burford Capital

Considering the 90-day investment horizon Affiliated Managers Group is expected to generate 0.85 times more return on investment than Burford Capital. However, Affiliated Managers Group is 1.17 times less risky than Burford Capital. It trades about 0.31 of its potential returns per unit of risk. Burford Capital is currently generating about 0.19 per unit of risk. If you would invest  11,511  in Affiliated Managers Group on May 10, 2022 and sell it today you would earn a total of  1,470  from holding Affiliated Managers Group or generate 12.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Affiliated Managers Group  vs.  Burford Capital

 Performance (%) 
       Timeline  
Affiliated Managers 
Affiliated Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Affiliated Managers Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Affiliated Managers may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Affiliated Price Channel

Burford Capital 
Burford Performance
20 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Burford Capital are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Burford Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Burford Price Channel

Affiliated Managers and Burford Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Affiliated Managers and Burford Capital

The main advantage of trading using opposite Affiliated Managers and Burford Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affiliated Managers 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.
The idea behind Affiliated Managers Group and Burford Capital 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.
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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