Correlation Between Broadridge Financial and Suncorp Group

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

Diversification Opportunities for Broadridge Financial and Suncorp Group

0.28

Correlation Coefficient

Broadridge Financial  Suncorp Group

Modest diversification

The 3 months correlation between Broadridge and Suncorp is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and Suncorp Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncorp Group Limited 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 Suncorp Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suncorp Group Limited has no effect on the direction of Broadridge Financial i.e., Broadridge Financial and Suncorp Group go up and down completely randomly.

Pair Corralation between Broadridge Financial and Suncorp Group

Assuming the 90 days horizon Broadridge Financial Solutions is expected to generate 0.33 times more return on investment than Suncorp Group. However, Broadridge Financial Solutions is 2.99 times less risky than Suncorp Group. It trades about -0.02 of its potential returns per unit of risk. Suncorp Group Limited is currently generating about -0.05 per unit of risk. If you would invest  21,516  in Broadridge Financial Solutions on December 22, 2024 and sell it today you would lose (516.00) from holding Broadridge Financial Solutions or give up 2.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Broadridge Financial Solutions  vs.  Suncorp Group Limited

Broadridge Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Broadridge Financial Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Broadridge Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Suncorp Group Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Suncorp Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Broadridge Financial and Suncorp Group

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

The idea behind Broadridge Financial Solutions and Suncorp Group Limited 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.