Correlation Between Pfizer and Burford Capital

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

Diversification Opportunities for Pfizer and Burford Capital

0.02
  Correlation Coefficient

Significant diversification

The 3 months correlation between Pfizer and Burford is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Burford Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burford Capital and Pfizer 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 Pfizer Inc 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 Pfizer i.e., Pfizer and Burford Capital go up and down completely randomly.

Pair Corralation between Pfizer and Burford Capital

Considering the 90-day investment horizon Pfizer is expected to generate 3.13 times less return on investment than Burford Capital. But when comparing it to its historical volatility, Pfizer Inc is 1.59 times less risky than Burford Capital. It trades about 0.07 of its potential returns per unit of risk. Burford Capital is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  926.00  in Burford Capital on May 16, 2022 and sell it today you would earn a total of  127.00  from holding Burford Capital or generate 13.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Pfizer Inc  vs.  Burford Capital

 Performance (%) 
       Timeline  
Pfizer Inc 
Pfizer Performance
0 of 100
Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pfizer Price Channel

Burford Capital 
Burford Performance
17 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Burford Capital are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Burford Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Burford Price Channel

Pfizer and Burford Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pfizer and Burford Capital

The main advantage of trading using opposite Pfizer and Burford Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer 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 Pfizer Inc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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