Correlation Between Broadridge Financial and Bank of Georgia

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

Diversification Opportunities for Broadridge Financial and Bank of Georgia

0.75

Correlation Coefficient

Broadridge Financial  Bank of Georgia

Poor diversification

The 3 months correlation between Broadridge and Bank is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and Bank of Georgia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Georgia 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 Bank of Georgia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Georgia has no effect on the direction of Broadridge Financial i.e., Broadridge Financial and Bank of Georgia go up and down completely randomly.

Pair Corralation between Broadridge Financial and Bank of Georgia

Assuming the 90 days trading horizon Broadridge Financial Solutions is expected to under-perform the Bank of Georgia. But the stock apears to be less risky and, when comparing its historical volatility, Broadridge Financial Solutions is 1.99 times less risky than Bank of Georgia. The stock trades about 0.0 of its potential returns per unit of risk. The Bank of Georgia is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  403,500  in Bank of Georgia on October 15, 2024 and sell it today you would earn a total of  46,500  from holding Bank of Georgia or generate 11.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Broadridge Financial Solutions  vs.  Bank of Georgia

Broadridge Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadridge Financial Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Bank of Georgia

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Georgia are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Bank of Georgia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Broadridge Financial and Bank of Georgia

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

The idea behind Broadridge Financial Solutions and Bank of Georgia 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.