Correlation Between Broadridge Financial and Pekin Life

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

Diversification Opportunities for Broadridge Financial and Pekin Life

0.71

Correlation Coefficient

Broadridge Financial  Pekin Life

Poor diversification

The 3 months correlation between Broadridge and Pekin is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and Pekin Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pekin Life Insurance 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 Pekin Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pekin Life Insurance has no effect on the direction of Broadridge Financial i.e., Broadridge Financial and Pekin Life go up and down completely randomly.

Pair Corralation between Broadridge Financial and Pekin Life

Allowing for the 90-day total investment horizon Broadridge Financial Solutions is expected to generate 0.68 times more return on investment than Pekin Life. However, Broadridge Financial Solutions is 1.47 times less risky than Pekin Life. It trades about 0.08 of its potential returns per unit of risk. Pekin Life Insurance is currently generating about 0.01 per unit of risk. If you would invest  14,530  in Broadridge Financial Solutions on October 22, 2024 and sell it today you would earn a total of  8,510  from holding Broadridge Financial Solutions or generate 58.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Broadridge Financial Solutions  vs.  Pekin Life Insurance

Broadridge Financial

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Broadridge Financial Solutions are ranked lower than 7 (%) 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 February 2025.

Pekin Life Insurance

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pekin Life Insurance are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Pekin Life is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Broadridge Financial and Pekin Life

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

The idea behind Broadridge Financial Solutions and Pekin Life Insurance 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.