Correlation Between Broadridge Financial and Calculus VCT

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

Diversification Opportunities for Broadridge Financial and Calculus VCT

-0.19

Correlation Coefficient

Broadridge Financial  Calculus VCT

Good diversification

The 3 months correlation between Broadridge and Calculus is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and Calculus VCT plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calculus VCT plc 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 Calculus VCT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calculus VCT plc has no effect on the direction of Broadridge Financial i.e., Broadridge Financial and Calculus VCT go up and down completely randomly.

Pair Corralation between Broadridge Financial and Calculus VCT

Assuming the 90 days trading horizon Broadridge Financial Solutions is expected to generate 0.57 times more return on investment than Calculus VCT. However, Broadridge Financial Solutions is 1.77 times less risky than Calculus VCT. It trades about 0.15 of its potential returns per unit of risk. Calculus VCT plc is currently generating about -0.04 per unit of risk. If you would invest  21,461  in Broadridge Financial Solutions on October 26, 2024 and sell it today you would earn a total of  2,198  from holding Broadridge Financial Solutions or generate 10.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Broadridge Financial Solutions  vs.  Calculus VCT plc

Broadridge Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Broadridge Financial Solutions are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Broadridge Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Calculus VCT plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calculus VCT plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Calculus VCT is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Broadridge Financial and Calculus VCT

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

The idea behind Broadridge Financial Solutions and Calculus VCT plc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.