Correlation Between Broadridge Financial and Givaudan

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

Diversification Opportunities for Broadridge Financial and Givaudan

-0.73

Correlation Coefficient

Broadridge Financial  Givaudan

Pay attention - limited upside

The 3 months correlation between Broadridge and Givaudan is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA 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 Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of Broadridge Financial i.e., Broadridge Financial and Givaudan go up and down completely randomly.

Pair Corralation between Broadridge Financial and Givaudan

Assuming the 90 days trading horizon Broadridge Financial Solutions is expected to under-perform the Givaudan. But the stock apears to be less risky and, when comparing its historical volatility, Broadridge Financial Solutions is 1.16 times less risky than Givaudan. The stock trades about -0.11 of its potential returns per unit of risk. The Givaudan SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  389,400  in Givaudan SA on October 5, 2024 and sell it today you would earn a total of  7,400  from holding Givaudan SA or generate 1.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Broadridge Financial Solutions  vs.  Givaudan SA

Broadridge Financial

Risk-Adjusted Performance

7 of 100

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Givaudan SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Givaudan SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Broadridge Financial and Givaudan

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

The idea behind Broadridge Financial Solutions and Givaudan SA 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 the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.