Correlation Between Blucora and Burford Capital

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

Diversification Opportunities for Blucora and Burford Capital

0.32
  Correlation Coefficient

Weak diversification

The 22 months correlation between Blucora and Burford is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Blucora and Burford Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burford Capital and Blucora 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 Blucora 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 Blucora i.e., Blucora and Burford Capital go up and down completely randomly.

Pair Corralation between Blucora and Burford Capital

Given the investment horizon of 90 days Blucora is expected to generate 0.91 times more return on investment than Burford Capital. However, Blucora is 1.1 times less risky than Burford Capital. It trades about 0.05 of its potential returns per unit of risk. Burford Capital is currently generating about 0.04 per unit of risk. If you would invest  1,174  in Blucora on March 28, 2022 and sell it today you would earn a total of  670.00  from holding Blucora or generate 57.07% return on investment over 90 days.
Time Period22 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.0%
ValuesDaily Returns

Blucora  vs.  Burford Capital

 Performance (%) 
      Timeline 
Blucora 
Blucora Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Blucora are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Blucora may actually be approaching a critical reversion point that can send shares even higher in July 2022.

Structure and Payout Changes

Last Split Factor
1:10
Ex Dividend Date
2008-01-09
Last Split Date
2002-09-13

Blucora Price Channel

Burford Capital 
Burford Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Burford Capital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Burford Capital is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.014
Forward Annual Dividend Rate
0.12
Dividend Date
2022-06-17
Ex Dividend Date
2022-05-26

Burford Price Channel

Blucora and Burford Capital Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Blucora and Burford Capital

The main advantage of trading using opposite Blucora and Burford Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blucora 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.

Blucora

Pair trading matchups for Blucora

The idea behind Blucora 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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