Correlation Between Broadcom and CATLIN GROUP
Can any of the company-specific risk be diversified away by investing in both Broadcom and CATLIN GROUP 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 Broadcom and CATLIN GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadcom and CATLIN GROUP , you can compare the effects of market volatilities on Broadcom and CATLIN GROUP 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 Broadcom with a short position of CATLIN GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadcom and CATLIN GROUP.
Diversification Opportunities for Broadcom and CATLIN GROUP
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Broadcom and CATLIN is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Broadcom and CATLIN GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CATLIN GROUP and Broadcom 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 Broadcom are associated (or correlated) with CATLIN GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CATLIN GROUP has no effect on the direction of Broadcom i.e., Broadcom and CATLIN GROUP go up and down completely randomly.
Pair Corralation between Broadcom and CATLIN GROUP
Assuming the 90 days trading horizon Broadcom is expected to generate 3.0 times more return on investment than CATLIN GROUP. However, Broadcom is 3.0 times more volatile than CATLIN GROUP . It trades about 0.01 of its potential returns per unit of risk. CATLIN GROUP is currently generating about -0.07 per unit of risk. If you would invest 18,200 in Broadcom on September 13, 2024 and sell it today you would lose (10.00) from holding Broadcom or give up 0.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Broadcom vs. CATLIN GROUP
Performance |
| Timeline |
| Broadcom |
| CATLIN GROUP |
Broadcom and CATLIN GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broadcom and CATLIN GROUP
The main advantage of trading using opposite Broadcom and CATLIN GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadcom position performs unexpectedly, CATLIN GROUP 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 CATLIN GROUP will offset losses from the drop in CATLIN GROUP's long position.| Broadcom vs. Samsung Electronics Co | Broadcom vs. Samsung Electronics Co | Broadcom vs. Hyundai Motor | Broadcom vs. Reliance Industries Ltd |
| CATLIN GROUP vs. Pfeiffer Vacuum Technology | CATLIN GROUP vs. Hilton Food Group | CATLIN GROUP vs. Sabien Technology Group | CATLIN GROUP vs. Spotify Technology SA |
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 the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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