Correlation Between Broadridge Financial and MSA Safety

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

Diversification Opportunities for Broadridge Financial and MSA Safety

0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between Broadridge and MSA is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and MSA Safety in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSA Safety 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 MSA Safety. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSA Safety has no effect on the direction of Broadridge Financial i.e., Broadridge Financial and MSA Safety go up and down completely randomly.

Pair Corralation between Broadridge Financial and MSA Safety

Allowing for the 90-day total investment horizon Broadridge Financial Solutions is expected to generate 0.88 times more return on investment than MSA Safety. However, Broadridge Financial Solutions is 1.14 times less risky than MSA Safety. It trades about 0.1 of its potential returns per unit of risk. MSA Safety is currently generating about 0.06 per unit of risk. If you would invest  16,923  in Broadridge Financial Solutions on September 17, 2024 and sell it today you would earn a total of  6,314  from holding Broadridge Financial Solutions or generate 37.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Broadridge Financial Solutions  vs.  MSA Safety

 Performance 
       Timeline  
Broadridge Financial 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Broadridge Financial Solutions are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Broadridge Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.
MSA Safety 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days MSA Safety has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MSA Safety is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Broadridge Financial and MSA Safety Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Broadridge Financial and MSA Safety

The main advantage of trading using opposite Broadridge Financial and MSA Safety positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadridge Financial position performs unexpectedly, MSA Safety 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 MSA Safety will offset losses from the drop in MSA Safety's long position.
The idea behind Broadridge Financial Solutions and MSA Safety 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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