Correlation Between Broadridge Financial and Intermediate Capital

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

Diversification Opportunities for Broadridge Financial and Intermediate Capital

0.39

Correlation Coefficient

Broadridge Financial  Intermediate Capital

Weak diversification

The 3 months correlation between Broadridge and Intermediate is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Broadridge Financial i.e., Broadridge Financial and Intermediate Capital go up and down completely randomly.

Pair Corralation between Broadridge Financial and Intermediate Capital

Assuming the 90 days trading horizon Broadridge Financial is expected to generate 3.13 times less return on investment than Intermediate Capital. But when comparing it to its historical volatility, Broadridge Financial Solutions is 2.29 times less risky than Intermediate Capital. It trades about 0.19 of its potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  206,400  in Intermediate Capital Group on October 27, 2024 and sell it today you would earn a total of  25,000  from holding Intermediate Capital Group or generate 12.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Broadridge Financial Solutions  vs.  Intermediate Capital Group

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.

Intermediate Capital

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Capital Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Intermediate Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Broadridge Financial and Intermediate Capital

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

The idea behind Broadridge Financial Solutions and Intermediate Capital Group 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.