Correlation Between Broadridge Financial and Willdan

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

Diversification Opportunities for Broadridge Financial and Willdan

-0.51

Correlation Coefficient

Broadridge Financial  Willdan

Excellent diversification

The 3 months correlation between Broadridge and Willdan is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Broadridge Financial Solutions and Willdan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willdan Group 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 Willdan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willdan Group has no effect on the direction of Broadridge Financial i.e., Broadridge Financial and Willdan go up and down completely randomly.

Pair Corralation between Broadridge Financial and Willdan

Allowing for the 90-day total investment horizon Broadridge Financial is expected to generate 3.28 times less return on investment than Willdan. But when comparing it to its historical volatility, Broadridge Financial Solutions is 3.73 times less risky than Willdan. It trades about 0.07 of its potential returns per unit of risk. Willdan Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,847  in Willdan Group on December 21, 2024 and sell it today you would earn a total of  459.00  from holding Willdan Group or generate 11.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Broadridge Financial Solutions  vs.  Willdan Group

Broadridge Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Broadridge Financial Solutions are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

Willdan Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Willdan Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Willdan displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Broadridge Financial and Willdan

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

The idea behind Broadridge Financial Solutions and Willdan Group 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.