Correlation Between Broadridge Financial and Summit Materials

Can any of the company-specific risk be diversified away by investing in both Broadridge Financial and Summit Materials 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 Summit Materials 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 Summit Materials Cl, you can compare the effects of market volatilities on Broadridge Financial and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadridge Financial and Summit Materials.

Diversification Opportunities for Broadridge Financial and Summit Materials

0.32

Correlation Coefficient

Broadridge Financial  Summit Materials

Weak diversification

The 3 months correlation between Broadridge and Summit is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and Summit Materials Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Broadridge Financial i.e., Broadridge Financial and Summit Materials go up and down completely randomly.

Pair Corralation between Broadridge Financial and Summit Materials

Assuming the 90 days trading horizon Broadridge Financial Solutions is expected to generate 2.92 times more return on investment than Summit Materials. However, Broadridge Financial is 2.92 times more volatile than Summit Materials Cl. It trades about 0.09 of its potential returns per unit of risk. Summit Materials Cl is currently generating about 0.23 per unit of risk. If you would invest  23,231  in Broadridge Financial Solutions on December 4, 2024 and sell it today you would earn a total of  1,230  from holding Broadridge Financial Solutions or generate 5.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	70.97%
Values	Daily Returns

Broadridge Financial Solutions  vs.  Summit Materials Cl

Broadridge Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Broadridge Financial Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Broadridge Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Summit Materials

Risk-Adjusted Performance

Solid

Over the last 90 days Summit Materials Cl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Summit Materials is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Broadridge Financial and Summit Materials

The main advantage of trading using opposite Broadridge Financial and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadridge Financial position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.

The idea behind Broadridge Financial Solutions and Summit Materials Cl 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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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.