Correlation Between Broadcom and EQB

Can any of the company-specific risk be diversified away by investing in both Broadcom and EQB 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 Broadcom and EQB into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Broadcom and EQB Inc, you can compare the effects of market volatilities on Broadcom and EQB 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 Broadcom with a short position of EQB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadcom and EQB.

Diversification Opportunities for Broadcom and EQB

0.6

Correlation Coefficient

Broadcom  EQB

Poor diversification

The 3 months correlation between Broadcom and EQB is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Broadcom and EQB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQB Inc and Broadcom 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 Broadcom are associated (or correlated) with EQB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQB Inc has no effect on the direction of Broadcom i.e., Broadcom and EQB go up and down completely randomly.

Pair Corralation between Broadcom and EQB

Assuming the 90 days trading horizon Broadcom is expected to under-perform the EQB. In addition to that, Broadcom is 2.11 times more volatile than EQB Inc. It trades about -0.09 of its total potential returns per unit of risk. EQB Inc is currently generating about 0.0 per unit of volatility. If you would invest  9,812  in EQB Inc on December 25, 2024 and sell it today you would lose (121.00) from holding EQB Inc or give up 1.23% of portfolio value over 90 days.

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

Broadcom  vs.  EQB Inc

Broadcom

Risk-Adjusted Performance

Very Weak

Over the last 90 days Broadcom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

EQB Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days EQB Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, EQB is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Broadcom and EQB

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

The idea behind Broadcom and EQB Inc 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.