Correlation Between Burford Capital and Simply Good

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

Diversification Opportunities for Burford Capital and Simply Good

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Burford and Simply is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Burford Capital and Simply Good Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simply Good Foods 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 Simply Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simply Good Foods has no effect on the direction of Burford Capital i.e., Burford Capital and Simply Good go up and down completely randomly.

Pair Corralation between Burford Capital and Simply Good

Considering the 90-day investment horizon Burford Capital is expected to generate 1.61 times less return on investment than Simply Good. But when comparing it to its historical volatility, Burford Capital is 1.13 times less risky than Simply Good. It trades about 0.13 of its potential returns per unit of risk. Simply Good Foods is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,296  in Simply Good Foods on September 6, 2022 and sell it today you would earn a total of  709.00  from holding Simply Good Foods or generate 21.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Burford Capital  vs.  Simply Good Foods

 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 newest stock price agitation, may contribute to short-term losses for the retail investors.

Burford Price Channel

Simply Good Foods 
Simply Performance
15 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Simply Good Foods are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Simply Good revealed solid returns over the last few months and may actually be approaching a breakup point.

Simply Price Channel

Burford Capital and Simply Good Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Burford Capital and Simply Good

The main advantage of trading using opposite Burford Capital and Simply Good positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burford Capital position performs unexpectedly, Simply Good 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 Simply Good will offset losses from the drop in Simply Good's long position.
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The idea behind Burford Capital and Simply Good Foods 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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