Correlation Between Broadridge Financial and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both Broadridge Financial and Geely Automobile 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 Broadridge Financial and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadridge Financial Solutions and Geely Automobile Holdings, you can compare the effects of market volatilities on Broadridge Financial and Geely Automobile 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 Broadridge Financial with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadridge Financial and Geely Automobile.
Diversification Opportunities for Broadridge Financial and Geely Automobile
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Broadridge and Geely is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and Geely Automobile Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geely Automobile Holdings and Broadridge Financial 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 Broadridge Financial Solutions are associated (or correlated) with Geely Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geely Automobile Holdings has no effect on the direction of Broadridge Financial i.e., Broadridge Financial and Geely Automobile go up and down completely randomly.
Pair Corralation between Broadridge Financial and Geely Automobile
Assuming the 90 days horizon Broadridge Financial is expected to generate 2.45 times less return on investment than Geely Automobile. But when comparing it to its historical volatility, Broadridge Financial Solutions is 3.07 times less risky than Geely Automobile. It trades about 0.24 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 170.00 in Geely Automobile Holdings on September 13, 2024 and sell it today you would earn a total of 24.00 from holding Geely Automobile Holdings or generate 14.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Broadridge Financial Solutions vs. Geely Automobile Holdings
Performance |
| Timeline |
| Broadridge Financial |
| Geely Automobile Holdings |
Broadridge Financial and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broadridge Financial and Geely Automobile
The main advantage of trading using opposite Broadridge Financial and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadridge Financial position performs unexpectedly, Geely Automobile 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 Geely Automobile will offset losses from the drop in Geely Automobile's long position.| Broadridge Financial vs. MCEWEN MINING INC | Broadridge Financial vs. PARKEN Sport Entertainment | Broadridge Financial vs. Transportadora de Gas | Broadridge Financial vs. Harmony Gold Mining |
| Geely Automobile vs. BYD Company Limited | Geely Automobile vs. MERCEDES BENZ GRP ADR14 | Geely Automobile vs. Superior Plus Corp | Geely Automobile vs. SIVERS SEMICONDUCTORS AB |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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