Correlation Between Burford Capital and Bank of New York

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

Diversification Opportunities for Burford Capital and Bank of New York

0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between Burford and Bank of New York is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Burford Capital and Bank Of New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of New York 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 are associated (or correlated) with Bank of New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of New York has no effect on the direction of Burford Capital i.e., Burford Capital and Bank of New York go up and down completely randomly.

Pair Corralation between Burford Capital and Bank of New York

Considering the 90-day investment horizon Burford Capital is expected to generate 1.52 times more return on investment than Bank of New York. However, Burford Capital is 1.52 times more volatile than Bank Of New. It trades about 0.04 of its potential returns per unit of risk. Bank Of New is currently generating about 0.03 per unit of risk. If you would invest  679.00  in Burford Capital on April 8, 2022 and sell it today you would earn a total of  274.00  from holding Burford Capital or generate 40.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.2%
ValuesDaily Returns

Burford Capital  vs.  Bank Of New

 Performance (%) 
      Timeline 
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 recent stock price agitation, may contribute to short-term losses for the retail investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0124
Forward Annual Dividend Rate
0.12
Dividend Date
2022-06-17
Ex Dividend Date
2022-05-26

Burford Price Channel

Bank of New York 
Bank of New York Performance
0 of 100
Over the last 90 days Bank Of New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in August 2022. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Bank of New York Price Channel

Burford Capital and Bank of New York Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Burford Capital and Bank of New York

The main advantage of trading using opposite Burford Capital and Bank of New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burford Capital position performs unexpectedly, Bank of New York 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 Bank of New York will offset losses from the drop in Bank of New York's long position.
The idea behind Burford Capital and Bank Of New 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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