Correlation Between Broadridge Financial and CBIZ

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

Diversification Opportunities for Broadridge Financial and CBIZ

0.81

Correlation Coefficient

Broadridge Financial  CBIZ

Very poor diversification

The 3 months correlation between Broadridge and CBIZ is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and CBIZ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBIZ Inc 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 CBIZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBIZ Inc has no effect on the direction of Broadridge Financial i.e., Broadridge Financial and CBIZ go up and down completely randomly.

Pair Corralation between Broadridge Financial and CBIZ

Allowing for the 90-day total investment horizon Broadridge Financial Solutions is expected to generate 0.48 times more return on investment than CBIZ. However, Broadridge Financial Solutions is 2.08 times less risky than CBIZ. It trades about 0.08 of its potential returns per unit of risk. CBIZ Inc is currently generating about 0.03 per unit of risk. If you would invest  19,609  in Broadridge Financial Solutions on October 13, 2024 and sell it today you would earn a total of  2,537  from holding Broadridge Financial Solutions or generate 12.94% return on investment over 90 days.

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

Broadridge Financial Solutions  vs.  CBIZ Inc

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. Even with relatively invariable basic indicators, Broadridge Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

CBIZ Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CBIZ Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, CBIZ showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Broadridge Financial and CBIZ

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

The idea behind Broadridge Financial Solutions and CBIZ 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.