Correlation Between Broadridge Financial and CoreCivic

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

Diversification Opportunities for Broadridge Financial and CoreCivic

0.88

Correlation Coefficient

Broadridge Financial  CoreCivic

Very poor diversification

The 3 months correlation between Broadridge and CoreCivic is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and CoreCivic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreCivic 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 CoreCivic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoreCivic has no effect on the direction of Broadridge Financial i.e., Broadridge Financial and CoreCivic go up and down completely randomly.

Pair Corralation between Broadridge Financial and CoreCivic

Allowing for the 90-day total investment horizon Broadridge Financial is expected to generate 1.29 times less return on investment than CoreCivic. But when comparing it to its historical volatility, Broadridge Financial Solutions is 2.49 times less risky than CoreCivic. It trades about 0.1 of its potential returns per unit of risk. CoreCivic is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,156  in CoreCivic on September 20, 2024 and sell it today you would earn a total of  897.00  from holding CoreCivic or generate 77.6% 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.  CoreCivic

Broadridge Financial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Broadridge Financial Solutions are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Broadridge Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CoreCivic

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CoreCivic are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, CoreCivic showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Broadridge Financial and CoreCivic

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

The idea behind Broadridge Financial Solutions and CoreCivic 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.