Correlation Between Burford Capital and Invesco QQQ

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

Diversification Opportunities for Burford Capital and Invesco QQQ

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Burford and Invesco is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Burford Capital and Invesco QQQ Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco QQQ Trust 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 Invesco QQQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco QQQ Trust has no effect on the direction of Burford Capital i.e., Burford Capital and Invesco QQQ go up and down completely randomly.

Pair Corralation between Burford Capital and Invesco QQQ

Considering the 90-day investment horizon Burford Capital is expected to generate 1.18 times more return on investment than Invesco QQQ. However, Burford Capital is 1.18 times more volatile than Invesco QQQ Trust. It trades about 0.01 of its potential returns per unit of risk. Invesco QQQ Trust is currently generating about -0.06 per unit of risk. If you would invest  869.00  in Burford Capital on September 11, 2022 and sell it today you would earn a total of  4.00  from holding Burford Capital or generate 0.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Burford Capital  vs.  Invesco QQQ Trust

 Performance (%) 
       Timeline  
Burford Capital 
Burford Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Burford Capital are ranked lower than 1 (%) 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.

Burford Price Channel

Invesco QQQ Trust 
Invesco Performance
0 of 100
Over the last 90 days Invesco QQQ Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF insiders.

Invesco Price Channel

Burford Capital and Invesco QQQ Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Burford Capital and Invesco QQQ

The main advantage of trading using opposite Burford Capital and Invesco QQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burford Capital position performs unexpectedly, Invesco QQQ 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 Invesco QQQ will offset losses from the drop in Invesco QQQ's long position.
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The idea behind Burford Capital and Invesco QQQ Trust 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.
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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 Fund Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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